UK wage growth slows ahead of BoE decision

Official labour market figures from the Office for National Statistics (ONS) published Tuesday show a 7.2% growth in British salaries excluding bonuses – a decrease on the previous three month runs and a sharp decrease from the record high 7.9% increase this summer.

According to The Resolution Foundation, wage hikes were primarily linked to cost of living pressures as workers struggled to maintain their living standards. It also said the latest figures could ease pressure on high pay awards.

The number of job vacancies also fell for a 17th consecutive month, by 45,000, marking the longest period of decline on record. Also in decline were the number of employees on the payroll, by 13,000, between October and November according to provisional data.

Provisional ONS data also showed that rates of employment and unemployment remained the same at 4.2% in the three months to October.

Danni Hewson, AJ Bell head of financial analysis said, “The big question was whether there’d be anything in this latest set of jobs figures to trouble Bank of England rate setters when they meet later this week.

“The answer is a resounding no and taking a look at market expectation another no-change decision looks almost nailed on.

“As the economy has cooled so has that record pace of wage growth which had so troubled MPC members.

“Whilst the labour market is still showing remarkable resilience, pressure on employers to keep relaxing those purse strings has eased.

“Pay increases are finally being felt and whilst prices remain high people have adapted and are hyper aware of where they spend every penny and how far those pennies are stretching.

“People are being cautious and they’re not blowing the bank on Christmas 2023. They’ve had a hard education on the power inflation wields and the bitter taste of the medicine required to counteract it.

“Vacancy numbers, though still way above pre-pandemic levels, have continued to ease up and considering the impact of the cost-of-living crisis on our disposable income, it’s no surprise that the biggest fall over the past three months has come from the arts, entertainment and recreation sectors.

“There’s been an awful lot of talk about that mythical soft landing and there’s no doubt the full effects of the brutal rate hike cycle are yet to filter through, but so far, the employment see-saw has managed to balance out with unemployment unchanged at 4.2%.

“More work needs to be done to help those stuck in the economically inactive category if any kind of meaningful GDP growth is to be achieved, especially with the current political pressure on legal migrants and the UK work force.”