UK wage growth equals pace seen in ’08 despite tough labour market

UK wages have risen at their fastest pace since 2008 amid tough labour market conditions, according to new data from the Office of National Statistics.

UK Employment
Source: Bloomberg

Basic wage growth in the UK has increased to a 10-year high between August and October, with the UK employment nearly as low as its lowest rate witnessed in 1975, according to new data from the Office of National Statistics.

In its latest report the ONS said that estimated 32.48 million people in work, 79,000 more than for May to July 2018 and 396,000 more than for a year earlier.

Latest estimates by the ONS also show that average weekly earnings for employees in Britain in real terms (adjusted for price inflation) increased by 1% excluding bonuses, and by 1.1% including bonuses, compared to last year.

Brexit uncertainty weighs heavy on UK economy

‘The October UK jobs data will give the Bank of England a real headache. On the one hand, pay growth keeps improving, but on the other economic growth looks like it’s slowing,’ Dan Hanson of Bloomberg Economics said.

’Given the intense uncertainty about the outcome of Brexit talks, we expect the BOE to sit on its hands until the terms of Britain’s departure from the EU are known.’

Normally, with wage growth improving the Bank of England would look to raise interest rates to reduce inflation, which in turn would help fuel further increases in pay, especially when the latest ONS figures show that average weekly earnings in nominal terms (not adjusted for inflation) increased by 3.3%.

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