UK pay ex-bonuses rises at fastest pace since decade
The UK wage growth accelerated to a near 10-year high, backing the Bank of England's view that there is now no spare capacity in the labour market.
Tuesday, 13th November 2018
The UK wage growth accelerated to a near 10-year high, backing the Bank of England's view that there is now no spare capacity in the labour market.
Average earnings excluding bonuses rose 3.2 percent in the three months through September from a year earlier, beating the 3.1 percent in the three months through August and was the most since December 2008, the Office for National Statistics said on Tuesday. Unemployment unexpectedly rose from a 43-year low to 4.1 percent.
The pay figure was higher than the 3.1 percent rate predicted by economists in a survey. Upward pressure on wages is a sign of domestically generated inflation. With productivity subdued (output per hour rose an annual 0.1 percent in the third quarter), Bank of England officials say gradual rate hikes will be needed.
While wage growth including bonuses accelerated to 3 percent.
Pay is continuing to outpace prices, a relief for households squeezed by the inflation surge following the 2016 Brexit vote, and a further pick up is a forecast. But real wages are still below their pre-2008 crisis levels. Job creation has helped to support consumer spending.
The number of people in work rose 23,000 to a record 32.4 million, leaving the employment rate at 75.5 percent.
Prime Minister Theresa May will welcome the pay figures as a sign of economic strength as she faces intense pressure over Brexit.
Brexit-related labour shortages are becoming evident with 132,000 fewer European Union nationals working in Britain than a year earlier. The record decline was driven by citizens of eight of the ten countries that joined the EU in 2004.
In a sign of a tight labour market, the number of hours worked climbed by 1 percent in the third quarter. Vacancies hit a record high in the three months through October.
Pay is rising fastest in the private sector (3.3 percent versus 2.8 percent for government workers) but easing austerity should see the public sector start to catch up.
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