Wage growth jumps again while unemployment falls to another post-financial crisis low

By:

Add as a preferred source on Google

Average weekly wages excluding bonuses rose by an inflation-busting 2.2 per cent in March, official figures published this morning showed – a welcome relief for consumers.

Read more: Bank of England cuts UK growth forecasts 

Meanwhile, unemployment fell to another post-financial crisis low of 5.5 per cent (that's the best figure since July 2008), while the number of vacancies rose to 733,000 between February and April, up 95,000 from the same period last year. The number of people classifying themselves as "unemployed" fell by 35,000

The figures, from the Office for National Statistics (ONS) average weekly pay excluding bonuses was £460 during the month, while total pay (ie. including bonuses) was £489, 1.9 per cent higher. Meanwhile, inflation in March stuck at zero per cent.

The pound rose 0.43 per cent against the dollar, to $1.5739 on the news, while it gained 0.21 per cent against the euro, pushing it to €1.4004. However, in later trading it reversed those gains, as the Bank of England's quarterly inflation report slashed UK growth forecasts. 

James Knightley, an analyst at ING, pointed out that consumers should begin to feel less squeezed. 

" Given inflation is at zero and that the tax free personal allowance has just been increased, households should be starting to sense that they have more money in their pockets. This should be good news for confidence."

Howard Archer, the chief economist at IHS Global Insight, warned that although unemployment is likely to continue to fall, it will be hampered by a skills shortage. 

"We expect the number of jobless to trend steadily downward over the coming months, taking the unemployment rate down to 5.2% by the end of 2015, and to 4.9% by the end of 2016.
 
"Expected healthy economic growth over the coming months is seen supporting demand for labour, but rising productivity is expected to limit the fall in unemployment. It is also evident that in some sectors, companies are now finding it harder to get the skilled and experienced workers that they need."