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UK wage growth falls to three-month low, jobless rate steady
[LONDON] British wage growth fell by more than expected to hit its lowest in three months in June, official data showed on Wednesday, while the unemployment rate held steady over the same period.
Growth in average weekly earnings in the three months to June slumped to 2.4 per cent on the year, slowing down from 3.2 per cent in the three months to May, well below economists'forecasts of 2.8 per cent in a Reuters poll.
The Office for National Statistics also said Britain's unemployment rate held steady at 5.6 per cent after an unexpected rise in the three months to May.
May's increase in unemployment was the first since early 2013 and left economists unsure whether Britain's recovery was weakening, or if this was a brief hiccup as employers hunted for better-qualified staff.
The Bank of England is closely eyeing Britain's labour market as it judges when to raise interest rates for the first time since the start of the financial crisis in 2008.
Wages have picked up faster than the BoE expected earlier this year, but last week the BoE said this was partly mitigated by stronger productivity and the fact that wage rises were driven by higher bonuses, something which could prove temporary.
Markets pushed back expectations for an interest rate rise in Britain last week after only one Bank of England official voted for a rise in borrowing costs against expectations that two or more would do so.
The number of people in employment fell on the quarter to 31.035 million in the second quarter of 2015, down 63,000 from the calendar quarter record in the first three months of 2015.
Excluding bonuses, average weekly earnings growth held steady at 2.8 per cent in the three months to June as expected. This rate was last higher in early 2009.
Inflation, as measured by the consumer prices index, fell to zero per cent in June.
The combination of rising earnings and subdued inflation is boosting the spending power of households, which saw their real income hurt by five years of wages rising less than inflation.
The number of people claiming unemployment benefits, dropped by 4,900 to 792,400 in July, after a small increase in June.