A surprisingly steep contraction in December retail sales matched with a continued slowdown in retail deposit growth suggested wage growth slowed sharply in the end of the year.
This morning brought the confirmation. While headline annual wage growth ticked higher to 5.8% vs 5.6% in the previous month, the advance was driven by the public sector. We estimate annual wage growth here accelerated to a whopping 16% from a bit below 10% in November.
On the other hand the picture worsened for the private sector were annual wage growth dipped to 3.3%, the softest pace since December 2009, from 4.6% previously and a similar average in the past 12 months.
It seems that employers did not manage to award the same year-end bonus payments to their employees and this suggest the former believe the business environment has deteriorated. This suggests that the labour market is likely to worsen over the coming quarters and posses an important risk to our 2013 growth projections. There are growing risks that the GDP contraction started in 3Q12 likely spread to 1Q13 and this means that our below-consensus GDP projection of 0.5% for 2013 may be a tad too optimistic.
Source: bne