of the euro. employment, which grew by 0. 3 per cent in the first quarter, was supported by a further increase in the 1 / 3 bis - central bankers'speeches labour force, which expanded at the same rate. more jobs are likely to have been created in the second quarter, mainly in the services sector. firms are gradually reducing their job postings, but from high levels. national fiscal and structural policies should aim at making the economy more productive and competitive, which would help to raise potential growth and reduce price pressures in the medium term. an effective, speedy and full implementation of the next generation eu programme, progress towards capital markets union and the completion of banking union, and a strengthening of the single market are key factors that would help foster innovation and increase investment in the green and digital transitions. we welcome the european commission's recent guidance calling for eu member states to strengthen fiscal sustainability and the eurogroup's statement on the fiscal stance for the euro area in 2025. implementing the eu's revised economic governance framework fully and without delay will help governments bring down budget deficits and debt ratios on a sustained basis. inflation annual inflation eased to 2. 5 per cent in june, from 2. 6 per cent in may. food prices went up by 2. 4 per cent in june – which is 0. 2 percentage points less than in may – while energy prices remained essentially flat. both goods price inflation and services price inflation were unchanged in june, at 0. 7 % and 4. 1 % respectively. while some measures of underlying inflation ticked up in may owing to one - off factors, most measures were either stable or edged down in june. domestic inflation remains high. wages are still rising at an elevated rate, making up for the past period of high inflation. higher nominal wages, alongside weak productivity, have added to unit labour cost growth, although it decelerated somewhat in the first quarter of this year. owing to the staggered nature of wage adjustments and the large contribution of one - off payments, growth in labour costs will likely remain elevated over the near term. at the same time, recent data on compensation per employee have been in line with expectations and the latest survey indicators signal that wage growth will moderate over the course of next year. moreover, profits contracted in the first quarter, helping to offset the inflationary effects of higher unit labour costs, and survey evidence suggests that profits should continue to be dampened in the near term. inflation is expected to fluct

on the other hand, have been stagnant on average. as a result, the real trade surplus has been increasing with some fluctuations. the nominal current - account surplus has also been expanding significantly since april 1997, partly reflecting the decline in crude oil prices since early 1997. after recording high growth during the second half of 1996 and the first quarter 1997, industrial production in the second quarter remained virtually unchanged as the decline in demand following the surge ahead of the consumption tax hike was offset by factors such as the substantial increase in exports and the rebuilding of inventories. production in the third quarter is expected to remain mostly unchanged from the second quarter. this is because a minor production cutback is expected in the transportation machinery industry where inventories have accumulated, while production will continue a steady increase in the electrical machinery industry. inventories are at appropriate levels on the whole, except for the transportation machinery industry. - 2with respect to labor market conditions, the unemployment rate remains at a high level, and the increase in overtime working hours has slowed somewhat, reflecting developments in production. however, year - to - year growth in nominal wages and employment has been moderate but steady, reflecting the increase in corporate profits. thus, labor market conditions and income formation continue to improve moderately on the whole. prices remained stable on the whole, excluding the effect of the consumption tax hike. domestic wholesale prices ( adjusted for seasonal electricity rates ) have remained virtually unchanged. this is because overall domestic supply and demand conditions have improved moderately, except for some construction goods, while import prices have declined. the year - to - year declines in corporate service prices are narrowing steadily on the whole, partly owing to the improvement in supply and demand conditions, particularly for real estate rents and information services, although leasing charges continue to decline. consumer prices ( nationwide, excluding perishables ) overall are stable, marginally above the previous year ’ s level, mainly because the year - to - year declines in goods prices have narrowed. the growth in monetary aggregates, measured in terms of the year - to - year growth of m2 + cds average outstanding, has continued at around 3 per cent. regarding money market rates, the overnight call rate ( uncollateralized ) has moved at a level slightly below the official discount rate. the 3 - month cd rate has stayed at around 0. 55 per cent. meanwhile, the long - term government bond yield has been declining since the end of may as the market confirmed the moderate pace of the economic recovery