Yesterday I was pointing out to a deterioration in recent data regarding the Romanian economy. Few more data were released yesterday after my post. One was salary evolution and the other retail consumption.
I would have rather waited for the detailed GDP numbers before commenting but a title in ZF today caught my attention ” Salariile au urcat cu 8% în iulie, iar consumul a raportat prima creştere după doi ani şi jumătate (Wages increased 8% in July, while consumption reported first increase in 2 1/2 years)”. Good news right?
Let’s look at the numbers. Wages first. From the article and title one would think the Romanian economy is powering away. Amid all the global issues there is this small very productive economy that affords to increase average net wages by 8.6% in one year. What is the secret? For one this is almost the exact increase in average prices therefore in reality wages are just catching up with inflation. Furthermore, since April 2011 average net wages have been falling from one month to the next. Hmmm, so July 2011 wages are higher than July 2010 but lower than April 2011!!!!!!!!. Is this good news? What does this mean besides really high volatility in Romanian average wages? Nothing. In fact the average net wage in Romania just barely closes the gap with yearly inflation with a lag of few months. And when we look at what the average net wage in EURO is in Romania – 350 – the question about purchasing power comes to mind. This figure alone shows how little does the Romanian consumption matter for local or global demand.
Moving on to retail consumption there is a 0.1% increase relative to the same month of last year. Rhetorically the author of the article asks if this is the sign that retail consumption is coming back. Well, in June 2010 retail consumption increased by 3.2% relative to the previous June but was followed by 12 months of average yearly decreases of about 7%. Considering the current global economic environment and the recent history of retail consumption I think there is a high probability this month is not the turning point for this variable.
I do not understand the obsession to hide or misrepresent. Most of the time when it comes to data releases it is enough to just mention them. There is no need to interpret it, especially out of context.