UK Wages See Slight Slowdown in August, According to Office for National Statistics
Average earnings in the UK, excluding bonuses, rose by 7.8% during the three months leading up to the end of August, according to the Office for National Statistics (ONS). This figure, although still significant, represents a slight slowdown compared to the upwardly revised rate of 7.9% recorded in the previous three months. The ONS also reported that total pay, which includes one-off bonuses, increased by 8.1% over the same period.
Economists, who were polled by Reuters, had predicted that regular wages would grow by 7.8% during this period. These figures are being closely monitored by the Bank of England as it weighs the possibility of raising interest rates. The recent surge in wages has fueled speculation that the Bank may choose to resume its rate hikes, which were paused due to uncertainty surrounding Brexit.
The rate of pay growth recorded in July was the highest since records began in 2001. While the latest figures show a slight decrease, they still indicate a strong and positive trend in the UK labor market. Despite uncertainties caused by Brexit negotiations, the job market in the country remains resilient, with employers continuing to offer competitive wages to attract and retain skilled workers.
The stability of the British pound was largely unaffected by the news, with minimal movement against the US dollar following the announcement. The lack of significant market reaction suggests that investors were already anticipating the modest slowdown in wage growth.
The recent increase in wages can be attributed, in part, to a tightening labor market. With unemployment rates at their lowest level in over 40 years, employers are facing increased competition for workers, leading to higher wages. However, economists caution that the sustainability of this trend may be in question. The uncertain outcome of Brexit negotiations, combined with slowing global economic growth, could exert pressure on the UK labor market in the coming months.
While the UK’s wage growth remains robust, there are concerns about the wider implications for the economy. Higher wages have the potential to stoke inflation, which could lead to a higher cost of living for consumers. Additionally, there are fears that businesses may struggle to absorb the increased labor costs, potentially leading to reduced investment and job creation.
Overall, the latest figures from the ONS indicate a slight slowdown in UK wage growth, but still demonstrate a positive trend in the country’s labor market. The Bank of England will undoubtedly be monitoring these developments closely as it considers the future direction of interest rates. With Brexit on the horizon, the sustainability of these wage increases remains uncertain, and economists will be keen to observe how the labor market responds to ongoing economic challenges.
More detail via Investing.com UK here… ( Image via Investing.com UK )