Wage growth eases while numbers in payrolled employment fall back
Market expectations of a further interest rate rise in November ease back after the latest ONS figures.
James Sillars
Business reporter @SkyNewsBiz
Tuesday 17 October 2023 09:20, UK
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The pace of basic wage growth has fallen back for the first time since January, according to official figures being closely watched by the Bank of England.
Data from the Office for National Statistics (ONS) showed that average basic wages rose by 7.8% during the three months to August compared to a year earlier.
That was down slightly from a revised rate of 7.9% last month.
Separate figures for average weekly earnings, which include bonus payments, showed a marked easing to 8.1% from 8.5% but that is believed to reflect the impact of public sector awards paid in June.
The data may provide some comfort to policymakers at the Bank who are worried that high wage growth risks stoking inflation which is currently running at 6.7%.
The concern is that any boost to household spending power, because wage growth is running at a higher pace, will bolster demand and place upwards pressure on prices.
It was revealed last month that the rate of pay growth was outstripping inflation for the first time in 18 months.
But the Bank’s monetary policy committee (MPC) held off on a 15th consecutive interest rate rise due to other factors.
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The most glaring was a steeper easing in inflation than had been anticipated.
But it could yet impose a further 0.25 percentage point increase in November if it fails to see inflation continuing to slow.
The figures for September are due to be released on Wednesday.
Market expectations of a rate rise in November fell back in the wake of the ONS report.
Refinitiv data showed 77% of participants believed there would be no increase when the MPC’s next decision is announced on 2 November. The figure was closer to 70% before the data was released.
The wider ONS figures showed the number of people in payrolled employment fell by 11,000 in August.
It also reported that the number of job vacancies in the three months to September was 988,000, down from 998,000 in the three months to August.
Unemployment figures and other related labour market data will not be published until next week after the ONS said that it needed more time to take account of low response rates.
