BRUSSELS, June 15(Xinhua) -- Hourly labour costs rose by 2.0 percent in the eurozone and by 2.7 percent in the 28-nation European Union in the first quarter of 2018, compared with the same quarter of the previous year, Eurostat data showed on Friday, signaling the bloc's economy moves in right direction.
Wages and salaries and non-wage costs are the two main components of labor costs.
Data showed that the sharp rise in eurozone labour cost growth from 1.4 in Q4 to 2.0 percent in Q1 was partly driven by an acceleration in non-wage costs growth, which includes, for example, employers' social security contributions. The eurozone non-wage cost increased by 2.6 percent in the eurozone in 2018 Q1 from 0.8 percent in the previous quarter.
But wage growth picked up too, from 1.6 percent to 1.8 percent.
"The pick-up in euro-zone wage growth in Q1 is another sign that the economy is moving in the right direction," Jack Allen, senior European economist from Capital Economics said.
"Looking ahead, we think that euro-zone wage growth will continue to rise," Allen added.
The economist believes that wage growth
will pick up slightly more quickly than productivity growth over the coming years, which would in turn push up core inflation.
"The ECB's updated guidance supports our view that it will wait until September next year to respond to a gradual rise in core inflation with higher interest rates. We then think that it will tighten a little more quickly than investors expect," Allen said.
