UK wages grew at a faster than expected pace in April, reinforcing expectations the Bank of England will raise interest rates next week.
Figures from the Office for National Statistics show growth in average regular pay, excluding bonuses, strengthened to 7.2% in the three months to April – the highest level on record, excluding the Covid pandemic.
Fuelled by bumper pay rises in the City of London for employees in finance and business services, the latest snapshot showed total pay, including bonuses, also increased by 6.5% over the same period.
At those rates, pay growth still lags behind inflation – currently at 8.7% – meaning pay is falling in real terms, putting pressure on household finances.
Economists said April’s large increase in wage growth could partly reflect low-pay employers responding to the 9.7% increase in the “national living wage” at the start of the month but said the rise in overall average wages was driven mainly by momentum in higher-paying sectors.
It comes as the Bank of England is expected to raise interest rates for a 13th time in succession from the current level of 4.5% to tackle stubborn inflationary pressures across the British economy.
In a sign of continued strength in the British jobs market, the unemployment rate unexpectedly fell to 3.8% in the three months to April as companies continued to hire new recruits despite growing financial pressure from rising borrowing costs and subdued consumer demand.
Employment rose by 250,000 in the three months to April, lifting the number of people in work overall above pre-pandemic levels for the first time and setting a fresh record high of more than 33 million.
However, long-term sickness among working-age adults outside the jobs market continued to rise, reaching a new record high.
Reflecting heightened economic uncertainty holding back recruitment in some industries, the number of job vacancies fell for the 11th consecutive period, dropping by 79,000 on the quarter to stand at just over 1m.
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Average regular pay growth in the private sector accelerated to 7.6%, the largest growth rate seen outside the pandemic period, when the figures were distorted by furlough and changes in employment. Public sector wage growth was 5.6%, the highest level since 2003.
Hussain Mehdi, a strategist at HSBC Asset Management, said the figures would add to pressure on the Bank to raise interest rates after inflation fell by less than expected in April to 8.7%.
“The UK labour market remains very tight and continues to confound expectations. For the Bank of England, wage growth is a big problem – it is simply at too high a level to allow inflation to hit the 2% target. And unlike in the US, there are no obvious signs that wage pressures are moderating.”
https://news.google.com/rss/articles/CBMia2h0dHBzOi8vd3d3LnRoZWd1YXJkaWFuLmNvbS9idXNpbmVzcy8yMDIzL2p1bi8xMy91ay13YWdlLWdyb3d0aC1qdW1wcy1tYWtpbmctaW50ZXJlc3QtcmF0ZS1yaXNlLW1vcmUtbGlrZWx50gFraHR0cHM6Ly9hbXAudGhlZ3VhcmRpYW4uY29tL2J1c2luZXNzLzIwMjMvanVuLzEzL3VrLXdhZ2UtZ3Jvd3RoLWp1bXBzLW1ha2luZy1pbnRlcmVzdC1yYXRlLXJpc2UtbW9yZS1saWtlbHk?oc=5
2023-06-13 08:19:00Z
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