UK wages continue to surge as Bank of England set to decide on interest rates
UK unemployment remained steady over the last three months as wage growth surged over the quarter to October.
Unemployment was unchanged at 4.3 per cent for the second straight month during October, data from the Office for National Statistics revealed.
The number of people claiming jobless benefits climbed by just 300 in November, beating the 28,200 jump expected by analysts. This compared to a 10,900 fall in October.
However, average earnings excluding bonuses spiked by 5.2 per cent in the three months to October, compared to a 4.9 per cent rise in September and above market expectations of five per cent.
Average earnings, including bonuses, similarly climbed quickly, rising 5.2 per cent compared to 4.6 per cent estimates and previous figures of 4.4 per cent.
The increase in wage growth was partially credited to the summer’s above-inflation public sector pay deals by analysts.
However, private sector earnings growth was above that of the public sector, at 5.4 per cent versus 4.3 per cent respectively.
Joe Nellis economic adviser to MHA, the accountancy and advisory firm said: “The unemployment rate holding steady at a relatively low 4.3 per cent is not a significant cause for celebration, as the long-standing problems in the UK’s labour market continue to undermine attempts to reignite a flatlining and underperforming economy.”
To create the conditions for a growing economy, the government will need to encourage and help them return to the workforce to expand the country’s productive power.”
Interest rate outlook
The Bank of England is set to decide the path for interest rates in the year’s final Monetary Policy Committee on Thursday.
However, the Bank is widely expected to keep interest rates on hold after a jump in inflation, with the latest figures showing prices rising at 2.3 per cent in October, above the bank’s two per cent target.
“Policymakers will clearly be seeking a significant cooling in earnings pressures before being convinced that the risk of persistent price pressures is receding, and that sticky services inflation may begin to ease,” said Michael Brown, senior research strategist at Pepperstone.
Lindsay James, investment strategist at Quilter Investors said: “The Bank of England will be carefully analysing this data ahead of its rate decision later this week.
“Rates remain at 4.75%, with persistent wage inflation remaining above historical norms, which is likely to keep the Bank on alert.
“Labour market cooling is evident but remains incremental, with payrolled employee numbers showing little change in 2024 and wage growth still rising. However, businesses are likely to feel the pinch from the recent national insurance rise, which could keep a lid on hiring and wage increases as they navigate higher employment costs.”