Inflation bites into Danish income
Infation in Denmark hit a higher than expected 2.8% in February, sending real incomes lower, said Danske Bank.
The bank forecasts average earnings in the private sector to grow 2% in 2012, which means that currently real incomes are dropping. Public sector workers are experiencing an even faster fall in their real incomes, because their wages are growing slower still.
Lars Olsen, private economist at the bank said the latest figures suggest the average family is DKK600 (€81) worse off per month than they were a year ago in real terms.
“Inflation, low wage growth and higher taxes mean that most Danes have less money to live on than a year ago.”
Certain sectors of the economy are doing better according to trade figures relased by Statistics Denmark.
Exports grew 2.2% between December to January. It was the fourth month in a row of growing exports. January’s figure of DKK52.4bn was the highest since May 2011.
This success was heavily dependent on oil exports at a time of firmer oil prices. Stripping out these exports shows a much lower month-on-month growth in exports of 0.3%, Danske Bank economist Jens Pedersen said.
Near term export potential is good because of improving purchasing manager index scores in key export markets. This suggests order books of Danish companies may gain. Over a longer period the economy should benefit from recent collective bargaining agreements leading to lower wage growth than competitors, which should make Danish exports more competitive, Pedersen said.