Despite the rising unemployment, the UK wage growth registered its strongest growth on record in the three months to July adding pressure on the Bank of England to hike the interest rate further at its upcoming meeting this month.
The unemployment rate rose to 4.3 percent in the three months to July from 4.2 percent in the preceding period, the Office for National Statistics reported Tuesday. The rate came in line with expectations.
Regarding the wage growth, data showed that average earnings excluding bonuses grew the most since records began in 2001. Regular pay rose 7.8 percent annually in the May to July period, in line with expectations.
Including bonus, annual growth in average earnings was 8.5 percent versus the expected growth of 8.2 percent.
The cooling in labor market conditions still has not fed through to an easing in wage growth, Capital Economics’ economist Ashley Webb said.
The development in wages suggests that BoE’s work is not yet done and supports the assessment that the Bank will raise interest rates by a further 25 basis points next week to a peak of 5.50 percent, and keep rates there until the second half of next year, the economist added.
The BoE next meets on September 21. The bank has raised its benchmark rate over the last fourteen consecutive meetings, taking the rate to the highest since early 2008.
In the three months to July, the employment rate dropped 0.5 percentage points from the previous quarter to 75.5 percent mainly due to the fall in full-time self-employed workers.
Data showed that pay-rolled employees decreased 1,000 from July to 30.1 million in August.
The estimated number of vacancies decreased 64,000 on the quarter to 989,000 in June to August period. Vacancies fell for the 14th consecutive period.
In July, about 281,000 working days were lost because of labor disputes, the ONS said.
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