Aurelia Butler

German wages rose at a record annual pace of 6.6 per cent in the second quarter, boosting consumer spending power but fuelling concerns about inflation being pushed up by rising labour costs.The increase, which compared with wage growth of 5.6 per cent in the previous quarter, was the highest since collection of the data began in 2008. It took German annual wage growth above the country’s consumer price inflation rate — 6.5 per cent in the period — for the first time since 2021.“Real wages have declined for three years. Now they are at least stagnant,” said Enzo Weber, head of research at the Institute for Employment Research in Nuremberg.The figures raise hopes that a rebound in German consumer spending could support the country’s economy, which has shrunk or stagnated for the past three quarters, as household incomes start to catch up with the cost of living.“For the economy it is good news as we need some degree of catch-up in wage growth to support the consumption recovery,” said Oliver Rakau, an economist at consultant Oxford Economics. “While real wages are finally turning positive, they remain well below pre-pandemic trends.”Second-quarter pay for German workers was boosted by increases in the minimum wage and one-off bonuses awarded by many companies to cushion the impact of higher inflation, according to the federal statistical office. The lowest paid fifth of the workforce enjoyed the highest wage rises, as their pay rose 11.8 per cent following last October’s increase in the minimum wage to €12 an hour. The maximum monthly earnings for tax-free, part-time “mini” jobs also rose from €450 to €520.The fastest wage growth was in sectors hit hardest by the pandemic, rising 12.6 per cent for hospitality workers, 11.9 per cent in the arts, entertainment and recreation sectors and 10 per cent in transport and warehousing.The figures could increase concern among European Central Bank policymakers about the risk of a wage-price spiral, in which high inflation pushes up labour costs and so feeds more price pressures. This could tip the balance in favour of a 10th consecutive rate rise at the ECB governing council’s next meeting on September 14, analysts say.

Melanie Debono, an economist at consultant Pantheon Macroeconomics, said Germany’s wage growth “will definitely push the ECB towards a September rate hike”.However, many of the factors behind the rise in German wages were “one-time events”, such as the increase in the minimum wage and bonuses, Weber said, adding: “This is not enough for a wage-price spiral.” The GfK market research group said on Tuesday that its German consumer confidence index fell from minus 24.6 to minus 25.5 this month as people’s income expectations declined. Despite rebounding from record lows during last autumn’s energy crisis, the index remains well below consistently positive pre-pandemic levels. The ECB has predicted companies will absorb the cost of higher wages by reducing profit margins. Dirk Schumacher, an economist at French bank Natixis, said this looked likely, adding: “Weak consumption will in fact imply that corporate margins will absorb some of this.” More

BRASILIA (Reuters) – Chinese investments in Brazil tanked 78% in 2022 compared with the previous year, hitting their lowest in 13 years as funds committed to resource projects plummeted, the Brazil-China Business Council (CEBC) said on Tuesday.China, Brazil’s largest trading partner, funneled $1.3 billion in direct investments into the country last year, the lowest level since 2009, according to a CEBC study. The performance contrasts with overall foreign direct investment (FDI) in Brazil in 2022, which skyrocketed by 95% to $90.6 billion, highest in a decade.Last year, just 28% of announced Chinese projects worth $4.7 billion went ahead, the CEBC said. That compares poorly with 2021, when pledged investments of $5.9 billion were fully realized, bolstered by two oil projects worth nearly $5 billion.That 2021 result established an unfavorable yardstick for comparison, said CEBC research head Tulio Cariello.Some of the projects could have been held up by license approvals, Cariello said, “which may eventually postpone execution.”Chinese mining firm Honbridge, for example, announced investments worth $2.1 billion that failed to proceed due to a pending environmental license.While China-sourced funds channeled to Brazil witnessed a sharp decline, Chinese investments globally saw a modest uptick of 2.8% over the past year, growing to $116.8 billion.Other factors affecting Chinese investments include the Ukraine conflict and the U.S.-China rivalry in Asia-Pacific, which prompted Beijing to prioritize “Belt and Road Initiative” investments that exclude Brazil, said Hsia Hua Sheng, an economist from the Sao Paulo Business Administration School of the Getulio Vargas Foundation (FGV-EAESP).Leftist President Luiz Inacio Lula da Silva, who traveled to China in April, has been endeavoring to bolster ties with Beijing, but recent economic indicators from the Asian powerhouse have sparked concern that it might be losing its ability to sustain robust growth. More

Foreign Minister Yoshimasa Hayashi told reporters that Japan would take “necessary action (on China’s aquatic product ban) under various routes including the WTO framework”.Filing a WTO complaint might become an option if protesting to China through diplomatic routes is ineffective, Economic Security Minister Sanae Takaichi said separately.The comments came as Japanese businesses and public facilities continued to receive harassment calls from phone numbers with the +86 Chinese country code, with many reporting callers complaining of the Fukushima water release.Fukushima prefectural government and public facilities in the prefecture have received about 3,000 such calls, Kyoto News reported, quoting the prefecture governor.The power plant operator Tokyo Electric Power has received about 6,000 such calls to date, local media reported, and the government said it was seeking help from telecommunications companies to block the calls.An increasing number of landline phone users are requesting to block foreign numbers, said a spokesperson at NTT Communications, a Nippon Telegraph and Telephone (OTC:NPPXF) unit. NTT and other phone companies including KDDI (OTC:KDDIF) and SoftBank (TYO:9984) Corp are discussing measures following the government’s request.NTT East, which serves the eastern half of the country including Fukushima, said it had set up a customer service centre on Tuesday specifically for harassment calls from overseas, in response to the government’s plea. “It is extremely regrettable and concerning about the large number of harassment calls that have likely come from China,” Trade Minister Yasutoshi Nishimura said during a news conference. He said that according to the people of Fukushima some calls were even going to hospitals.”Human life is at stake now. Please stop the calls immediately,” Nishimura said. The minister said the government was gathering information on the reports of movements to boycott Japanese products in China and would work with business leaders to address the situation.Japan is also conducting interviews with local travel agencies to gather information about the status of travel to Japan from China after media reports that some Japan-bound tours have been cancelled.”Some travel agencies responded that they had received cancellation requests while others said they had received inquiries about the safety of food and beverages, and the possibility of postponing or cancelling tours,” Japan’s Land Minister Tetsuo Saito told reporters.The move came after China earlier this month lifted pandemic-era restrictions on group tours for Japan and other key markets. More

BUENOS AIRES (Reuters) – Javier Milei, Argentina’s radical presidential front-runner, will need time to carry out his campaign pledges of scrapping the peso currency and cutting taxes on grains should he win the election, advisers told Reuters, adding that he could avoid congressional hurdles by using executive decrees.Ramiro Marra, part of Milei’s inner circle and his party’s candidate for mayor of Buenos Aires city, said Milei – who pulled off a shock win in a primary election this month – would dollarize the economy within two years and aim to remove taxes on the huge farm sector if he was elected.He added, however, that voters for Milei, a self-described libertarian and political outsider who made a name for himself as a ‘shock jock’ television pundit, should be realistic that his proposals would take time. “It has to be understood that administration proposals do not happen by magic,” Marra told Reuters in an interview at the office of his investment firm Bull Market Brokers in Buenos Aires, adding that whoever wins the Oct. 22 election – or more likely a November run-off – faced “hard months” ahead.Juan Napoli, also running for a Senate seat with Milei’s party, agreed time would be needed to lay the groundwork for reforms.Marra said dollarization would take from nine months to two years to make a reality, while he declined to give a timeframe on getting rid of taxes on grain exports, the country’s main economic driver, though said doing so was “our aim”.”We believe that we must take our foot off the agricultural sector,” he said, citing “inefficiencies from the creation of direct and indirect taxes” on the sector. He cited Chile’s more free-market model as an inspiration.Milei’s proposals have resonated with voters buckling under 113% annual inflation and weak economic growth, with many angry at the traditional political forces: the left-leaning ruling Peronist bloc and the conservative Together for Change coalition.Poverty affects nearly four-in-10 people, the benchmark interest rate has shot up to 118%, foreign currency reserves have run dry and tight capital controls have spawned an array of parallel currency exchange markets.Milei got 30% of the vote in an open primary this month, ahead of the Peronist coalition on 27% and the conservative opposition, which got 28%. The presidential candidates for the two blocs will be Economy Minister Sergio Massa and former security minister Patricia Bullrich, respectively.With Milei unlikely to have a majority in Congress even if he wins the presidency, Marra said the aim would be to “sow the seed” for a longer-term economic recovery, adding that the party would look for ways to bypass any congressional pushback.That could include plebiscites or executive decrees, he said. “All of the alternatives that are laid out in the law and the national constitution, we are going to use them.” More