Labour costs rise across Euro area

Labour costs in the Eurozone rose by 2.6 per cent in the first three months of the year, data showed yesterday. The figure was higher than expected, and a sharp jump from the 1.5 per cent increase in labour costs seen in the fourth quarter of 2010. Wage inflation climbed to 2.3 per cent from 1.4 per cent, while non-wage inflation doubled to 3.6 per cent from 1.8 per cent. “While this may not be sufficient to conclude that ‘second round’ effects are evident, the risk is certainly in that direction,” commented Ken Wattret of BNP Paribas. Eurozone interest rates are expected to rise next month.