UK pay growth soars and employment hits record high
British workers’ pay has reached its highest level in the last two years and the employment rate has hit a record high, according to the Office of National Statistics.
British workers average weekly earnings, including bonuses, has hit its highest level in the last two years in November, increasing 3.4% representing the biggest increase since July 2018, according to data released by the Office of National Statistics (ONS).
Furthermore, the number of British people in employment has increased by 141,000 to hit a record high of 32.54 million in the three months to November, the ONS said.
Britain’s job market boom
The UK’s job market has boomed in recent months, with record vacancies and more than 100,000 people over the three months to November returning to work after being unemployed – driving the unemployment rate down to 4%, its lowest level since the mid-70s.
‘Earnings growth extended its recent firmer trend in November, indicating that the tight labour market is pushing up pay - after suffering a relapse earlier this year,’ Chief economic adviser to the EY Item Club Howard Archer said. ‘There is certainly survey evidence that labour market tightness is pushing up starting salaries and pay for workers switching jobs.’
‘However, employers currently appear to be still only offering modest pay increases for their existing staff,’ he said. ‘It appears that some companies have been encouraged in giving modest pay rises to existing staff by a reluctance of many workers to change their jobs amid heightened economic uncertainties, with Brexit being a significant factor in this.’
Brexit uncertainty looms large over UK economy
But despite the recent pay and employment figures providing a degree of optimism for the UK economy, there are some that argue that the ONS data flies in the face of many British employers’ pessimistic outlook amid a myriad of macroeconomic headwinds.
‘The summer was a good time for the UK economy and so wage and jobs numbers reflect a time of strong business confidence, heightened productivity and relative political calm. Remember that?’ Chief economist at WorldFirst Jeremy Thomson-Cook said.
‘We do expect inflation to run higher eventually as wage pressures build but, for now, uneasy business sentiment will cap that impulse and will likely do so until Westminster and Brussels agree something more concrete than the simple need for a deal by 29 March,’ he said.
‘As it stands however, given these numbers and in the event of a deal on Brexit and a smooth exit from the EU at the end of March, the Bank of England could very easily raise interest rates in May,’ he added.
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