Italy – Employment is rising but wage growth remains suppressed

Although wage growth remains suppressed, rising employment and improved sentiment are aiding consumer spending. Italy’s currency is represented by CurrencyShares Euro Trust (NYSEARCA:FXE).

In May, the wage figure came in at an annual pace of 1.1%, below the previous month’s reading of 1.2%. After peaking at over 4% in 2009, wages have significantly declined to current levels, seen below. While economic activity has increased, continued slack in the labor market is holding down wage growth.

Meanwhile, employment is showing signs of improvement. In the first quarter, the employment figure came in at an annual pace of 0.38%, above the previous quarter’s reading of -0.14% contraction. Since the financial crisis, the employment measure in Italy trended sideways, but accelerated higher in recent months, seen below. Policy reform in recent years has been aimed at making the labor market more flexible, which has translated into rising employment.

Finally, low inflation and rising employment have been enough to offset lower wages, leading to increased consumer spending. In the most recent month, the retail sales figure came in at an annual pace of 0.93%, above the previous month’s reading of 0.74%. The pace of consumer spending growth is approaching decade highs, seen below.

Chosen excerpts by Job Market Monitor. Read the whole story at Italy’s Labor Market And The Euro | Seeking Alpha.