Hungary: High wage outflow in the private sector

Thu, Jun 19 2008, 08:24 GMT
by Orsolya Nyeste

Erste Bank der oesterreichischen Sparkassen AG


According to the CSO, gross average wages in the economy increased by 10.6% y/y in April (after 9.9% y/y, seen in March), within which the private sector gross wage growth was 10% y/y, still seen as high.

Furthermore, regular (ex bonuses) private sector gross wage growth - which is monitored closely by the central bank – accelerated to 9.1% y/y (from 7.7% y/y, published for March), indicating still uncomfortably high wage outflow in the sector.

According to the CSO, there were three extra working days in April this year, which distorted the figure, thus some correction should come in May. In addition, the impact of the higher minimal wage could have been significant, as well.

Although the existence of some distorting effects, the above figures still suggest the continuation of the rate hiking cycle. Another 25bp rate hike (to 8.75%) seems certain next Monday.

Market reaction: the forint reacted with fast appreciation to the April nominal wage figures, due to intensifying rate hiking expectations.

Published on  Thu, Jun 19 2008, 08:27 GMT

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