UK pay grows by more than expected as BOE mulls rate cuts
The BOE is monitoring for any signs that Britain’s still strong wage growth could revive high inflation
BRITISH wages excluding bonuses – in the sights of the Bank of England as it considers when to cut interest rates – grew by a stronger-than-expected 6.0 per cent in the first three months of 2024 compared with the same period a year earlier, data showed.
Economists polled by Reuters had forecast wage growth of 5.9 per cent which would have been lower than the 6.0 per cent increase in the three months to February.
The BOE is monitoring for any signs that Britain’s still strong wage growth could revive high inflation although it last week signalled that it could start cutting interest rates from their current 16-year high of 5.25 per cent as early as June.
Tuesday’s figures are the first of two labour market data releases from the Office for National Statistics that the BOE will consider before its next meeting.
Finance minister Jeremy Hunt, who is trying to help Prime Minister Rishi Sunak rein in the big opinion poll lead of the opposition Labour Party before an election this year, pointed to how wages were outstripping inflation.
“This is the 10th month in a row that wages have risen faster than inflation which will help with the cost of living pressures on families,” Hunt said in a statement.
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Total pay, which includes more volatile bonus payments, rose by 5.7 per cent, above economists’ expectations of a 5.5 per cent increase.
Private sector regular pay – a key metric for the BOE – eased slightly to 5.9 per cent from 6.0 per cent in the three months to February.
Sterling briefly edged up against the US dollar after the figures were published.
Despite the stubbornly strong pay growth, there were again some signs in Tuesday’s (May 14) data that Britain’s labour market was loosing some of its heat.
The ONS said the unemployment rate rose to 4.3 per cent, its highest since the three months to July 2023 although it cautioned that the survey from which the jobless rate is calculated is still being overhauled.
“We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods,” Liz McKeown, ONS’s director of economic statistics, said. REUTERS
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