We believe in 2.5 percent wage increase – OBI Online

Economists’ expectations for inflation in 12 months in Q1 2016 was 2.4 per cent, up 0.2 percentage points from the previous quarter, according to Norges Bank’s quarterly expectations survey.

The social partners expect 2.5 percent inflation, up 0.2 percentage points from the previous quarter. Company executives expect 2.4 percent, 0.1 percentage points more than in the previous quarter. Finally, expect households that prices will rise 3.1 percent during the next year, 0.3 percentage points more than in Q4.

Wage growth

The economists provide in 1. quarter 2016 an expected annual wage growth for the year of 2.2 percent, 0.4 percentage points less than in the previous quarter. The social partners expect 2.4 percent, 0.3 percentage points less than in Q4.

Call expects business leaders annual wage growth in 2016 of 2.3 percent, 0.1 percentage points less than in the previous quarter.

Households, however, has lower expectations and envisages 1.6 percent wage increase, down 0.3 percentage points from the previous quarter.

Stable profitability

24.3 percent of business leaders expect profitability improvement in their own business in the next 12 months, up 2.6 percentage points from the previous quarter.

the proportion of business leaders expecting weakened profitability in the future is 25.7 percent, down 3.9 percentage points from the previous quarter.

the entire 45.4 per cent of business leaders expect that profitability will remain stable during the year.

profitability index for the next 12 months is going down from 18.6 points in Q4 2013 to 12.7 points in Q1 2014.

Downward revision

Handelsbanken Marius Gonsholt Hov says in an update that expectation survey shows a salary expectation among the social partners (median ) of 2.5 percent this year, which is in line with other signals, such as from Norges Bank’s regional network.

– This reinforces our expectations that the Norges Bank will revise its earnings forecast. In Monetary Policy Report in December was forecast for wage growth of 2.8 percent, he writes, pointing out that such a downward adjustment also implies a downward revision of the underlying inflationary pressures and thus a reduction of control rate path.

– also showed expectation survey slightly less negative signals with regard to employment and profitability compared with the previous quarter, continuing Gonsholt Hov, pointing out that the signals nevertheless confirms Handelsbanken’s assessment that growth prospects are weaker than forecast by Norges Bank.

Read the full report here.