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Malta Insights

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LABOUR COSTS UP BY 0.8 PERCENT IN Q2 

Hourly labour costs grew by 0.8 percent in the second quarter this year in relation to the same period in 2019. The increase was the smallest compared with the previous four quarters. Eurostat figures show that the rise was driven mainly by non-wage components such as social contributions. Wage and salary costs registered a decrease of 0.1 percent year-on-year, the first time in the five quarters under review. 

In the EU, labour costs swelled by 4.1 percent, the highest quarterly rise over the entire period. The wage component registered an increase of 5.3 percent while the non-wage component grew by 0.1 percent. 

The highest rise in wage and salary in the EU was observed in Accommodation and Food Service activities (+13.5%), followed by Arts, entertainment, and recreation activities (+12.5%). At the same time, however, the two economic sectors also registered the highest decreases in non-wage costs, with a drop of 20.2 percent in Accommodation and Food Service activities and of 15.2 percent in Arts, entertainment, and recreation activities. 

LARGEST VACANCY RATE DECREASE IN THE EU 

Malta registered the sharpest drop in job vacancy posts among the EU27 when comparing the second quarter this year with the same period in 2019. Data by Eurostat shows that the job vacancy rate decreased by 1.6 percentage points, a decline larger than the EU average of 0.7 percentage points. The rate stood at 3.0 percent in Q2:19, falling to 1.6 percent in 2020.

Only France experienced an increase in the rate over the year, up by 0.1 percentage points, while Bulgaria remained stable. Czechia, however, recorded the highest vacancy rate at 5.4 percent, followed by Belgium (3.1%) and Austria (2.6%). At the other end, the lowest rate was seen in Greece, reaching 0.3 percent while Ireland, Spain, Poland, Portugal, and Romania all registered 0.7 percent. 

The job vacancy rate in industry and construction in Malta stood at 1.5 percent between April and June, down from 3.7 percent the previous year. The rate in service activities fell by 2.3 percentage point over the period, from 3.6 percent in Q2:19 to 1.3 percent this year. 

In the EU, the rate within industry and construction was 1.4 percent (-0.1pp) and 1.7 in the services sectors (-0.8pp). 

INDUSTRIAL PRODUCTION CLIMBS FOR SECOND MONTH 

Industrial production in Malta increased by 1.5 percent in July, compared to the previous month, registering the second consecutive rise. The average increase in the EU reached 4.1 percent, with only Denmark (-4.9%), Latvia (-0.8%), and Belgium (-0.5%) experiencing decreases from June, according to Eurostat data. Portugal saw the highest growth of 11.9 percent, followed by Spain (+9.4%) and Ireland (+8.3%). 

Production was up across all industrial groupings, rising by 5.6 percent in capital goods and by 4.8 percent in durable consumer goods. The smallest increase was recorded in energy production (+1.3%) and non-durable consumer goods (+2.8%). 

Compared with July 2019, industrial production in the EU fell by 7.3 percent, registering a sharp decrease in capital goods (-10.2%), intermedia goods (-8.7%), and energy (-6.6%). 

Denmark experienced a 13.6 percent decline, the largest in the EU27, followed by Germany (-11.6%) and Portugal (-9.6%). On the other hand, Ireland (+15.6%), Poland (+0.9%), and Latvia (+0.1%) were the only countries to record a year-on-year increase. 

Malta registered the fifth smallest decline from July 2019, with industrial production falling by 2.5 percent. The decrease was also the narrowest recorded in 2020.

INDEX OF CONSUMER PRICES HOLDS STEADY IN AUGUST 

The annual rate of inflation stood a t 0.7 percent for the second consecutive month in August, as measured by the Harmonised Index of Consumer Prices. Figures by the National Statistics Office show that the twelve-month moving average rate continues its decrease from 1.6 percent in January to 1.1 percent in August, the smallest increase in the 32 months under review. 

The highest annual inflation rates were registered in Clothing and Footwear (+3.1%) and Health (+2.4%) whereas Transport and Education recorded the lowest rates with a decrease of 1.6 percent and 7.7 percent, respectively. 

Restaurants and Hotels saw the highest increase in the monthly rate at 2.5 percent followed by Transport (+2.2%) and Education (+2.1%). Clothing and Footwear decreased by 7.1 percent month-on-month, the biggest drop ahead of Communication (-0.1%). 

The Food and Non-Alcoholic Beverage Index rose by 0.34 percentage points in August, the largest upward impact on the annual inflation rate. The Restaurants and Hotels Index increase by 0.29 percentage points while Miscellaneous Goods and services, including hairdressing services, gained 0.15 percentage points. 

On the other hand, Transport and Education were the main contributors of the downward rate, declining by 0.21 percentage points and 0.16 percentage points, respectively.

AGRICULTURAL OUTPUT OUTPACES EXPENSES IN 2019 

The agricultural industry registered an increase in net operating surplus of 1.1 percent in 2019, compared to the year before, reaching a total of €74.6 million. Data by the National Statistics Office shows that generated output by the industry grew by 4.3 percent amounting to €126.4 million, higher than €65.5 million in expenses of intermediate consumption (+1.1%) which cover energy and fuels, livestock feeding and crop cultivation costs, among others. Total employee compensation bill stood at €4.5 million, up 0.4 percent, whereas consumption of fixed capital fell by 0.9 percent to settle at €6.8 million. 

The industry benefited from a series of EU-funded programmes which disbursed a total of €26.1 million, a decrease of 12.6 percent from the previous year. 

Crop products recorded a year-on-year increase of 7.9 percent, reaching an output value of €49 million. The highest increase was observed in vegetable production (+15.3%) and flowers and seeds production (+13.0%). The output value of fruits and forage decreased by 14.2 percent and 1.3 percent, respectively.

Livestock products also registered an increase from 2018, growing by 5.5 percent and reaching a total output value of €41 million – the highest in five years under review. Production grew across all categories except pork, which dipped by 0.1 percent from the year before. The highest increase was seen in the breeding of rabbit, up by 9.5 percent. 

There was a 1.3 percent decrease in the output value of animal products, driven mainly by a drop of 6.9 percent in egg production. The total €29.3 million value was the second-highest since 2015. Products from secondary activities also fell by 2.0 percent, owing especially to a decrease of 11.0 percent in wine, which reached a total output value of €1.6 million – the smallest in five years. Cheese, on the other hand, registered the highest output value in the same period, amounting to €5.4 million or an increase of 1.0 percent from 2018.

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