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According to recent official figures, pay growth in the UK has risen for the first time in over a year. The Office for National Statistics (ONS) has stated that regular pay grew at an annual pace of 5.2% between August and October, exceeding analyst expectations, with wages continuing to increase faster than prices. This data means that the Bank of England is unlikely to cut interest rates at its upcoming meeting this week.
Nevertheless, the latest ONS data indicates that the job market is weakening, with a drop in the number of people on payrolls and a decrease in job vacancies. Despite the unemployment rate remaining unchanged at 4.3%, the reliability of the ONS’s job figures has been questioned due to issues with data collection.
Private sector pay saw the fastest annual increase of 5.4%, compared with 4.3% in the public sector. The bank typically monitors pay and job data when making decisions about interest rates. Due to the strength in pay growth, it is expected to hold interest rates rather than employing further cuts, especially in the wake of inflation decreasing earlier this year.
The country’s rise in pay growth may be short-lived, however, as recruitment has slowed and unemployment levels are gradually increasing. These factors, paired with rising inflation, could lead to wage growth slowing in the coming months. Regardless of the impending challenges, people are making real income gains for now thanks to low inflation
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