2 weeks Ago By Chris Dorrell
Bank of England rate-setters received a mixed picture from the latest labour market figures, with progress on wage growth stalling even as unemployment crept up. According to the Office for National Statistics (ONS), pay growth excluding bonuses eased to 4.8 per cent in the three months to September, down from 4.
9 per cent previously but slightly ahead of expectations. Including bonuses, however, annual wage growth rose to 4.3 per cent, up from 3.
8 per cent last month and well ahead of City projections. “Growth in pay excluding bonuses eased again this month to its lowest rate in over two years,” Liz McKeown, director of economic statistics at the ONS said. “Pay growth including bonuses increased, but for recent periods these figures have been affected by last year’s one-off payments made to public sector workers,” she added.
Unemployment, meanwhile, picked up to 4.3 per cent from 4.0 per cent previously, which was ahead of expectations.
However, the ONS continued to “advise caution” when interpreting the figures given the low response rates to its flagship labour force survey. The latest figures on the labour market come just a week after the Bank of England cut interest rates for the second time this year, bringing the Bank Rate down to 4.75 per cent.
Despite cutting interest rates, Andrew Bailey, Governor of the Bank, cautioned that the Bank would take a gradual approach in the months ahead, partly due to concerns about the jobs market. He suggested that the labour market continued to give policymakers “ mixed signals “. Although some surveys indicate that there is more slack in the economy than the official figures imply, the Bank suggested that the labour market “appears relatively tight by historical standards”.
A tight labour market should help to sustain strong pay growth, which would give consumers more spending power and put up wage bills for firms. More to follow.
