Monetary Policy & the Economy Q3-10

D:HI:GG:>8=>H8=:C6I>DC6A76C@ :JGDHNHI:B .0/&5"3:10-*$:5)&&$0/0.: 2VBSUFSMZ3FWJFXPG&DPOPNJD1PMJDZ 4UBCJMJUZBOE4FDVSJUZ 2 The OeNB’s quarterly publication Monetary Policy & the Economy provides analyses of cyclical developments, macroeconomic forecasts, studies on central banking and economic policy topics as well as research findings from macroeconomic workshops and conferences organized by the OeNB. Editorial board Peter Mooslechner, Ernest Gnan, Georg Hubmer, Franz Nauschnigg, Doris Ritzberger-Grünwald, Martin Summer, Günther Thonabauer Editors in chief Peter Mooslechner, Ernest Gnan Coordinator Manfred Fluch Editorial processing Karin Fischer, Susanne Pelz Translations Dagmar Dichtl, Ingrid Haussteiner, Rena Mühldorf, Irene Popenberger, Ingeborg Schuch Technical production Peter Buchegger (design) Walter Grosser, Susanne Sapik, Birgit Vogt (layout, typesetting) OeNB Web and Printing Services (printing and production) Paper Printed on environmentally friendly paper Inquiries Oesterreichische Nationalbank, Communications Division Postal address: PO Box 61, 1011 Vienna, Austria Phone: (+43-1) 40420-6666 Fax: (+43-1) 40420-6698 E-mail: [email protected] Orders/address management Oesterreichische Nationalbank, Documentation Management and Communications Services Postal address: PO Box 61, 1011 Vienna, Austria Phone: (+43-1) 40420-2345 Fax: (+43-1) 40420-2398 E-mail: [email protected] Imprint Publisher and editor: Oesterreichische Nationalbank Otto-Wagner-Platz 3, 1090 Vienna, Austria Günther Thonabauer, Communications Division Internet: www.oenb.at Printed by: Oesterreichische Nationalbank, 1090 Vienna, Austria © Oesterreichische Nationalbank, 2010 All rights reserved. REG.NO. AT- 000311 May be reproduced for noncommercial, educational and scientific purposes with appropriate credit. Printed in accordance with the Austrian Ecolabel guideline for print products (UW 820). DVR 0031577 Vienna, 2010 Contents Analyses Global Economy Continues to Recover 6 Gerhard Fenz, Philipp Mayer, Josef Schreiner The Austrian Labor Market and the Great Recession: Developments and Measures Taken 25 Alfred Stiglbauer Changes in the Wage Distribution in Austria: An Analysis Based on European Structure of Earnings Survey Data 45 Wolfgang Pointner, Alfred Stiglbauer Discount Pricing in Austria: Insights into Retail Business Practices and HICP Coverage 59 Manfred Fluch, Fabio Rumler, Tina Wittenberger Event Wrap-Ups Technological Change in the Field of Payment Instruments – Long-Term Implications for Monetary Policy and Competition Policy 92 Helmut Stix, Martin Summer Notes Abbreviations 100 Legend 101 List of Studies Published in Monetary Policy & the Economy 102 Periodical Publications of the Oesterreichische Nationalbank 105 Addresses of the Oesterreichische Nationalbank 107 Opinions expressed by the authors of studies do not necessarily reflect the official viewpoint of the Oesterreichische Nationalbank or of the Eurosystem. MONETARY POLICY & THE ECONOMY Q3/10 3 Analyses Global Economy Continues to Recover Gerhard Fenz, The economic recovery, which had started in Asia and then quickly spread to the U.S.A., Philipp Mayer, recently lost momentum in both regions. In the second quarter of 2010, the U.S. economy Josef Schreiner1 recorded real GDP growth (in annualized terms) of a mere 1.7% quarter on quarter, following 3.7% in the first three months of 2010 and 5.0% in the final quarter of 2009. In Japan, quarterly real GDP dropped to 0.4% in the second quarter of 2010 from 1.2% in the first quarter. Meanwhile, the global economy continues to benefit most from the momentum of the Asian threshold countries. China, which has replaced Japan as the third largest economy (after the U.S.A. and the euro area), posted 10.3% growth in the second quarter of 2010, only slightly less than in the previous quarter. In light of its vibrant import performance, China’s current account surplus is likely to be lower in 2010 than it was in 2009. In contrast to global developments, the European economy saw a growth spurt in the second quarter of 2010 thanks to unexpectedly favorable developments in Germany, which compensated for problems in the southern and western periphery of the euro area. Growth was driven above all by international trade, with the low euro exchange rate recorded in spring supporting the pickup of exports. In the second quarter of 2010, real GDP in the euro area climbed by 1.0% on the previous quarter, i.e. more strongly than expected. All euro area countries, excluding Greece, posted an expansion, with Germany being the main driver (2.2%). According to the most recent forecasts, the euro area is expected to rebound more markedly than previously envisaged. At an unchanged 10.0%, the seasonally adjusted unemployment rate for the euro area recorded in July 2010 continued to mark the highest value in twelve years. At 1.8%, the inflation rate remained moderate in September 2010. The latest forecasts do not point to any threats to price stability up until end-2011. The gradual economic recovery, which had become evident in the Central, Eastern and Southeastern European (CESEE) countries at end-2009, stabilized in the first six months of 2010, as the region, on balance, posted clearly positive quarter-on-quarter growth rates. Restocking and exports continued to buttress the economy, while consumption and investment did not foster growth in a sustainable manner. Despite a slight increase, inflation still remains at a relatively modest level. Financial markets have quieted for the time being after the turbulence of early summer 2010. In some countries, however, the situation remains highly uncertain. After an exceptionally powerful economic revival in Austria mid-2010, the OeNB expects continued robust economic activity in the second half of 2010 and a slowdown in line with world trade developments toward the end of the year. In 2010 as a whole, the Austrian economy is expected to grow by almost 2% on the back of animated export demand. Consid- ering that the recession was very pronounced, the current upturn is fairly restrained, and domestic demand is still too weak for a self-sustained upswing. JEL classification: E2, E3, O1 Keywords: global outlook, euro area, central and (south-)eastern Europe, Austria 1 Global Economic Growth first and second quarter of this year. Slows but Remains Robust All expenditure components, excluding 1.1 U.S.A.: Economic Sentiment net exports, contributed to the robust Deteriorating increase in the second quarter, with From January to June 2010, the U.S. particularly important contributions economy grew at a solid pace, with real coming from inventory changes, gross GDP increasing by 3.7% and 1.7% fixed capital formation and private con- (annualized) quarter on quarter in the sumption. Cutoff date for data: 1 Oesterreichische Nationalbank, Economic Analysis Division, [email protected]; Foreign Research Division, September 24, 2010 [email protected], [email protected]. 6 MONETARY POLICY & THE ECONOMY Q3/10 Global Economy Continues to Recover Chart 1 U.S.A.: Purchasing Managers’ Index (PMI) and GDP Growth Quarterly change in % % 2.0 70 1.5 65 1.0 60 0.5 55 0.0 50 –0.5 45 –1.0 40 –1.5 35 –2.0 30 Jan. 00 Jan. 01 Jan. 02 Jan. 03 Jan. 04 Jan. 05 Jan. 06 Jan. 07 Jan. 08 Jan. 09 Jan. 10 GDP (left-hand scale) Manufacturing PMI (right-hand scale) Non-manufacturing PMI (right-hand scale) Source: Institute for Supply Management (ISM), Bureau of Economic Analysis (BEA). Increasing investment activity not- able to government stimulus packages withstanding, numerous leading indica- that are now set to expire and to tors point to an economic slowdown restocking activity. and a U-shaped recovery in the U.S.A. Labor market developments will, as While in spring 2010 industrial pro- usual, be key in determining the fate of duction – and thus purchasing manager the U.S. economy. After the winter sentiment – had continuously risen, 2009/10 record high of 10% and mod- these figures started to downtrend in est declines in spring, unemployment early summer. The U.S. Purchasing climbed back up to 9.6% in August Managers’ Index consequently dipped 2010. New claims for unemployment markedly from April to July 2010, yet benefits, however, recently decreased stabilized again at least in August. In again somewhat. Whether or not the addition, while capacity utilization has labor market will rebound further will started to improve, it does so at a very depend on the performance of the con- slow pace. In August 2010, it edged up struction sector. The unexpected slide slightly to 74.4%, continuing the in productivity by 0.9% in the second modest increase since the beginning of quarter of 2010 is a red flag. This the year, while still remaining at a decline – the first one since the final historically low level. Further recent quarter of 2008 – is a further sign of a data likewise signal that the economic weakened U.S. economy. Even though recovery is likely to lose speed. More- the U.S. labor market seems to have over, consumer sentiment has weak- principally turned around in 2010, the ened again considerably. More pre- for U.S. standards extremely high cisely, the Conference Board indicator on unemployment rate is not expected to consumer sentiment had dropped by decline significantly. Unemployment close to 10 percentage points from May has stayed above 9% for 16 months in a to August 2010, when it rose again for row now, a record in the past 25 years. the first time since May. Growth in the In its September 2010 Federal Open first half of 2010 was above all attribut- Market Committee (FOMC) meeting, MONETARY POLICY & THE ECONOMY Q3/10 7 Global Economy Continues to Recover the Federal Reserve System concluded signaled its readiness to make further that the recovery of output and em- adjustments, if need be, to support the ployment had lost momentum over the recovery. past months. While gradually on the The Great Recession has led to a rise, household expenditure remains significant reduction in global imbal- weak owing to the high joblessness ances.

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