Core Insights - Croatia's labor costs have experienced explosive growth in recent years, with administrative expenses causing labor costs to exceed productivity levels [1] - Since 2019, the minimum wage has increased by 92%, and labor costs have risen by 61.6%, which is 2.5 times the EU average increase [1] - The public sector wage budget has grown by 58% over two years, with the gap between public sector average wages and the average wages in the real economy reaching a historical high of 32.3% [1] Labor Market Comparison - The Croatian Labor Minister compared wage levels between Croatia and Slovenia, noting that in 2016, Croatia's minimum wage was 50% of Slovenia's, but it has now risen to 75% [1] - In terms of average wages, Croatia's wages have increased from 72% of Slovenia's average to 90% [1] - Croatia's unemployment rate is currently at a historical low, indicating a tight labor market [1] Government Objectives - The Croatian government aims to continue increasing the minimum wage in line with average and median wages through social dialogue, encouraging economic development, and implementing measures to reduce labor costs [1]

Core Insights - The nominal hourly labor cost in the Eurozone increased by 3.6% year-on-year in Q2 2025, compared to a 3.4% increase in Q1 2025 [1] - The overall nominal hourly labor cost in the EU rose by 4.0% year-on-year in Q2 2025, slightly down from 4.1% in Q1 2025 [1] - Croatia's nominal hourly labor cost growth slowed to 9.2% in Q2 2025, down from 13.5% in Q1 2025 [2] Labor Cost Breakdown - In the Eurozone, wages and salaries grew by 3.7% year-on-year in Q2 2025, while non-wage costs increased by 3.4% [1] - In the EU, wages and salaries rose by 4.1%, and non-wage costs increased by 3.8% [1] - The construction sector saw the highest labor cost increases, with Eurozone and EU costs rising by 4.7% and 4.8% respectively [1] Country-Specific Insights - Bulgaria recorded the highest nominal hourly labor cost increase at 13.2%, followed by Hungary at 10.9%, Romania at 10.4%, and Estonia at 10.3% [1] - France had the slowest growth in labor costs at 1.4%, with Malta following at 1.8% [1]

Economic Outlook - The economic sentiment in the Eurozone improved in September, with the economic sentiment index rising by 1.0 points to 26.1, exceeding market expectations of 20.3 [1] - The current economic situation index also improved by 2.4 points to -28.8, indicating a more favorable outlook [1] - Approximately 51.7% of surveyed analysts expect stable economic activity, while 37.2% anticipate improvement, and 11.1% foresee deterioration [1] Labor Costs - Eurozone hourly labor costs increased by 3.6% year-on-year in Q2, slightly below the preliminary estimate of 3.7% but higher than the revised 3.4% in Q1 [1] - Wage growth was recorded at 3.7% in Q2, up from 3.5% in Q1, while non-wage costs grew by 3.4%, compared to the previous 3.2% [1] - Labor costs in the business economy sector rose by 4.0%, with construction leading at 4.7%, followed by services at 4.3%, and industry at 3.3% [1] Industrial Production - Eurozone industrial production increased by 0.3% month-on-month in July, reversing a previous decline of 0.6% and aligning with market expectations [2] - Year-on-year, industrial production grew by 1.8%, significantly faster than the 0.7% growth in June [2] - Notable increases were seen in capital goods production, which rebounded by 1.3%, durable consumer goods by 1.1%, and non-durable consumer goods by 1.5% [2] Economic Dynamics - The data indicates a recovery in economic momentum within the Eurozone, although persistently high labor costs may support inflation [3]

Group 1 - The UK job market is experiencing a cooling trend, with the unemployment rate reaching 4.7% in the second quarter, the highest level in nearly four years [1] - The number of registered jobs in the UK has decreased both year-on-year and month-on-month, indicating a decline in employment opportunities [1] - There were 718,000 job vacancies in the UK from May to July 2025, a decrease of 16.8% year-on-year and down 9.7% compared to pre-pandemic levels [1] Group 2 - 16 out of 18 monitored industries in the UK reported a reduction in job vacancies, with significant declines noted in the hospitality and retail sectors [1] - Continuous wage growth is posing challenges for businesses and the economy, leading many employers to halt hiring or implement layoffs [1] - A recent survey indicated that 73% of respondents identified high labor costs as the biggest pressure on business expenditures [1]

Group 1 - The overall core inflation is largely in line with the target set by the European Central Bank [1] - Most long-term inflation expectations are around 2% [1] - Labor costs are continuing to trend towards moderation [1] Group 2 - Wage growth is expected to further slow down [1] - The economic outlook faces downside risks [1]

Core Insights - The European Central Bank (ECB) President Christine Lagarde stated that overall core inflation is in line with targets, indicating a stable inflation environment [1] - Labor costs are continuing to ease, suggesting potential for improved economic conditions and consumer spending [1] Economic Indicators - Core inflation metrics are meeting the ECB's objectives, which may influence future monetary policy decisions [1] - The easing of labor costs could lead to a more favorable economic outlook, potentially impacting wage growth and consumer confidence [1]

Group 1 - The European Central Bank (ECB) President Christine Lagarde stated that overall core inflation is in line with targets [1] - Labor costs continue to ease, indicating a potential slowdown in wage growth [1] - Wage growth is expected to further decelerate, which may impact consumer spending and economic growth [1]

Core Insights - 43% of businesses in Canada expect labor costs to decrease over the next 12 months, while only 9% anticipate an increase [1] Group 1 - A significant majority of companies (43%) foresee a reduction in labor costs, indicating a potential easing of wage pressures in the market [1] - A minority of companies (9%) predict an increase in labor costs, suggesting that some sectors may still face upward wage pressures [1]

Core Insights - Eurozone labor costs increased by 3.4% year-on-year in the first quarter, down from a previous value of 3.7% [1] Group 1 - The year-on-year increase in labor costs indicates a slight deceleration in wage growth within the Eurozone [1]

Group 1 - The number of initial jobless claims in the U.S. unexpectedly increased to 247,000, exceeding market expectations of 235,000, marking the highest level since October 2024 [1] - The four-week average of initial jobless claims rose to 235,000, indicating a prolonged reemployment period for unemployed individuals [1] - Employers announced 93,816 layoffs in May, a 12% decrease from April but a 47% increase compared to the same month last year, reflecting economic pressures on companies [1] Group 2 - The U.S. non-farm labor productivity in Q1 decreased by 1.5% year-on-year, a larger decline than the previously reported 0.8%, marking the first decline since Q2 2022 [2] - Unit labor costs rose by 6.6% year-on-year in Q1, higher than the previously reported 5.7%, indicating increased labor costs for businesses [2] - Economic uncertainty due to tariffs is causing companies in sectors like airlines, retail, and automotive to withdraw or not issue financial guidance for 2025 [2]