Pay growth in the UK slows

Official statistics revealed that British wage growth slowed more than anticipated in the three months leading up to the end of October, but pay is likely still rising too swiftly to convince the Bank of England to lower interest rates anytime soon.

The Office for National Statistics (ONS) released its earnings numbers on Tuesday, showing a 7.3% increase in earnings after deducting bonuses over the previous year.

Reuters surveyed economists, who predicted a 7.4% increase.

After an upwardly revised estimate of a 7.8% increase in the three months leading up to September and a peak of 7.9% growth right before that, the result indicated a slowing in regular pay growth, the highest since the ONS started gathering data in 2001.

In the three months leading up to September, wage growth dropped to 7.2% from 8.0%, including bonuses, which are usually inconsistent.

The BoE is concerned that even in the face of a stagnating overall economy, wage growth—particularly in the private sector—remains too robust to bring inflation down to its objective of 2%.

In the private sector, earnings before bonuses fell to 7.3% in the three months ending in October from 7.9% in the July-September quarter.

Between December 2021 and August of this year, the central bank hiked interest rates 14 times in a row; after that, it has held rates steady. On Thursday, it is anticipated that borrowing costs will remain steady.

Officials have made it clear that they are not even close to considering lowering borrowing prices.

The figures released on Tuesday also revealed that over the three months leading up to September, employment increased by 50,000, while Britain's unemployment rate remained at 4.2%.

The ONS has stated that those numbers might not hold up since it had to alter how it uses its monthly Labour Force Survey to gauge the state of the labour market due to a decline in the number of replies it was receiving.

(Sources: investing.com, reuters.com)