UK labour costs rise at fastest rate since late 2013

[LONDON] British labour costs rose at the fastest annual rate since late 2013 in the three months after the country voted to leave the European Union, despite continued steady growth in productivity, official figures showed on Friday.

Year-on-year growth in unit labour costs - an underlying driver of inflation watched by the Bank of England - edged up to 2.3 per cent in the third quarter of 2016 from 2.2 per cent in the second quarter, its highest since the last three months of 2013.

Annual growth in output per hour rose to 0.4 per cent in Q3 from 0.2 per cent in Q2, though this partly reflects volatility in late 2015. Quarterly hourly output growth slowed marginally to 0.4 per cent in Q3 from 0.5 per cent in Q2.

"These estimates of productivity show that while labour productivity is improving, particularly in the services sector, it is still weak compared to that experienced in the recent past," ONS economist Richard Heys said.

REUTERS