UK earnings rise at fastest pace in more than six years

[LONDON] British earnings, excluding bonuses, grew at their fastest rate in more than six years in the three months to July, official data showed on Wednesday.

Growth in average weekly earnings, not including bonuses, rose by 2.9 in the May-July period, edging up slightly from the three months to June and in line with a median forecast in a Reuters poll of economists.

It was the fastest pace of growth in regular earnings since the three months to February 2009.

The Bank of England is watching closely for signs of a further pickup in pay as it debates when to start raising interest rates for the first time since the financial crisis.

The Office for National Statistics also said Britain's unemployment rate held steady at 5.5 per cent, matching a record low since before the financial crisis.

The unemployment rate rose in May for the first time since early 2013, raising concerns that a run of strong hiring by British employers had run out of steam and there were signs of a cooling in job creation in Wednesday's data.

Wages have picked up faster than the BoE expected earlier this year but a long-awaited improvement in productivity could take some of the inflationary heat out of higher pay.

BoE Governor Mark Carney has said a decision about whether to raise interest rates is likely to become clearer around the turn of the year. Carney is due to address British lawmakers on the economic outlook at 1315 GMT on Wednesday.

Including bonuses, average weekly earnings growth accelerated by 2.9 per cent, recovering from a slowdown in the three months to June but lagging the 3.3 per cent growth rate seen in the three months to May.

The growth in pay, while weaker than before the financial crisis, is boosting the spending power of households.

Inflation, as measured by the consumer prices index, fell back to zero per cent in August, the ONS said on Tuesday.

The number of people in employment rose by 42,000 in the three months to July to 31.095 million but the number of unemployed people also rose by 10,000 to 1.823 million.

The number of people claiming unemployment benefits, rose by 1,200 after falling by 6,800 in July.

REUTERS