Hungary’s labor market continues to be in a good shape. Today’s released figures showed that Hungarian wages rose 11.9 percent year-on-year in February, slightly down from January’s recorded growth of 13.8 percent year-on-year. The salaries in the public sector rose faster than in the private sector, owing to the government’s wage adjust program. The number of the employees rose 1.4 percent year-on-year. The biggest rise was recorded in the construction sector, rising 8.1 percent year-on-year; however, the number of employees rose in 16 sectors out of the 21.
The minimum wage rise of 8 percent year-on-year in 2018 was the main driver. Also, the lack of labor force pushed the salaries up. The labor market is expected to stay tight in 2018, thus the wage pressure might remain, noted KBC Market Research in a report.
“We see gross wage growth around 10 percent y/y and the net real wage growth around 8 percent y/y for 2018”, stated KBC Market Research.
In the meantime, the Hungarian currency has continued to fluctuate at levels around EUR/HUF 310, while the next big domestic event would be a rate setting meeting of the National Bank of Hungary held next week. The current macro data including the wage figures are unlikely to change the stance of the statement. The inflation remains close to the lower edge of the NBH’s inflation target range.
Moreover, the vice-governor began talking about low level of loan’s stock and they underpin an aggressive – over 10 percent year-on-year – rise of the stock in the next 10 years. It implies that the NBH will not hurry with rapid rate hikes, which might put some softening pressure on the HUF in the medium term. Moreover, it will not underpin the flattening of the yield-curve especially in case inflation begins to rise.
“Let us add that we expect headline inflation may reach 3 percent y/y level around the end of this year”, added KBC Market Research.
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