[UK] Basic wages hit record growth rate

Official data released on August 15 reveals that basic wages in Britain have surged to hit a new record growth rate. The news has added to the Bank of England’s concerns about long-term inflation pressures, despite 14 back-to-back increases in interest rates, RTÉ reports.

The figures showed some fresh signs of cooling in the jobs market. The unemployment rate rose unexpectedly from 4 per cent to 4.2 per cent, the highest since the three months to October 2021.

However, the increase in basic earnings - the strongest in recorded data back to 2001 - reportedly represented further motivation for Britain's high rate of inflation, Many employers were forced to offer increased pay to retain or attract talent.

In addition, annual pay growth including bonuses accelerated to 8.2 per cent, the fastest outside the pandemic period when government job subsidies distorted the data.

Ruth Gregory - an economist with Capital Economics - told Reuters that the wage data "suggests the Bank of England has a bit more work to do and supports our view that the Bank will raise rates from 5.25 per cent to 5.50 per cent in September, although a lot will depend on the next labour market release and two CPI inflation data releases."

Pay growth looks poised to overtake the rate of consumer price inflation which is forecast to have slowed to 6.8 per cent in July in data due to be released by the ONS on August 16.

Markets saw around a 55 per cent chance of the Bank of England's benchmark rates hitting 6 per cent in early 2024, up from their current level of 5.25 per cent. On August 14, the chance of rates going that high stood at about one in three.

Earlier this month, Governor Andrew Bailey reportedly said that the rate of pay growth was "materially above" the central bank's forecasts but the Bank of England also signalled it was getting close to pausing its run of interest rate increases.

Along with the surprise rise in the unemployment rate, the number of people in employment fell by 66,000. And job vacancies extended a run of falls to their lowest since mid-2021, also dropping by 66,000 on the quarter to 1.02 million.

Inactivity due to long-term sickness, however, rose to a new record high, exacerbating the challenge for employers trying to fill job vacancies and adding to the pressure on pay growth.

Source: RTÉ

(Quotes via original reporting)

Official data released on August 15 reveals that basic wages in Britain have surged to hit a new record growth rate. The news has added to the Bank of England’s concerns about long-term inflation pressures, despite 14 back-to-back increases in interest rates, RTÉ reports.

The figures showed some fresh signs of cooling in the jobs market. The unemployment rate rose unexpectedly from 4 per cent to 4.2 per cent, the highest since the three months to October 2021.

However, the increase in basic earnings - the strongest in recorded data back to 2001 - reportedly represented further motivation for Britain's high rate of inflation, Many employers were forced to offer increased pay to retain or attract talent.

In addition, annual pay growth including bonuses accelerated to 8.2 per cent, the fastest outside the pandemic period when government job subsidies distorted the data.

Ruth Gregory - an economist with Capital Economics - told Reuters that the wage data "suggests the Bank of England has a bit more work to do and supports our view that the Bank will raise rates from 5.25 per cent to 5.50 per cent in September, although a lot will depend on the next labour market release and two CPI inflation data releases."

Pay growth looks poised to overtake the rate of consumer price inflation which is forecast to have slowed to 6.8 per cent in July in data due to be released by the ONS on August 16.

Markets saw around a 55 per cent chance of the Bank of England's benchmark rates hitting 6 per cent in early 2024, up from their current level of 5.25 per cent. On August 14, the chance of rates going that high stood at about one in three.

Earlier this month, Governor Andrew Bailey reportedly said that the rate of pay growth was "materially above" the central bank's forecasts but the Bank of England also signalled it was getting close to pausing its run of interest rate increases.

Along with the surprise rise in the unemployment rate, the number of people in employment fell by 66,000. And job vacancies extended a run of falls to their lowest since mid-2021, also dropping by 66,000 on the quarter to 1.02 million.

Inactivity due to long-term sickness, however, rose to a new record high, exacerbating the challenge for employers trying to fill job vacancies and adding to the pressure on pay growth.

Source: RTÉ

(Quotes via original reporting)