U.K. Wages Rise at Fastest Pace Since 2008 in Tight Labor Market
(Bloomberg) -- U.K. wages grew at the fastest pace in 11 years in the three months through May and unemployment remained at its lowest rate since the mid-1970s.
Average earnings excluding bonuses rose 3.6%, the Office for National Statistics said Tuesday. The number of people in work rose 28,000 to a record high, leaving the jobless rate at a 44-year low of 3.8%.
- The figures underline the buoyancy of the labor market, which has boosted consumer spending and left employers struggling to find staff.
- Basic wage growth was higher than the 3.5% predicted by economists in a Bloomberg survey. Total pay rose 3.4%, boosted by settlements in the National Health Service and, to a lesser extent, April’s 4.9% increase in the minimum wage.
- Total public-sector pay growth was 3.6%, the most since 2010, and private-sector wages rose 3.4%.
- Wage growth continues to comfortably outpace consumer-price inflation, which averaged 2% during the period. Real earnings are now growing at the fastest pace since the end of 2016.
- There were some signs the labor market may be slowing, however. Employment growth was the weakest since the summer of 2018, lowering the employment rate, and vacancies fell to their lowest level for a year.
- The question is whether the slower pace of job creation reflects weaker demand for workers or firms struggling to find suitable staff. Part-time self employment accounted for almost all of the increase, as the number of employees fell. Economic inactivity increased.
- Strong jobs growth has depressed productivity, as employment increases faster than economic output.
- Total hours worked rose 1.9% from a year earlier between March and May, while data last week showed GDP increased just 1.7%.
- Fears about cost pressures in the labor market are being overshadowed by the threat of a no-deal Brexit and worries about the global slowdown. Investors see a Bank of England rate cut as more likely than an increase.
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