The three-month period ending in July saw U.K. wage growth remain at a record level, surpassing inflation and providing further evidence of rising wages. However, despite this positive trend, signs of a looser labor market are emerging due to rising unemployment.
Steady Growth in Average Weekly Earnings
Annual growth in average weekly earnings (excluding bonuses) remained steady at 7.8% in the three months to July. This rate is the highest since records began in 2001. The Office for National Statistics published this data on Tuesday, confirming that wage increases continue to outpace annual consumer price rises.
Unemployment Rate Slightly Up
The U.K.’s unemployment rate experienced a slight increase, rising to 4.3% in the same period. This rate is slightly higher than the 4.2% recorded in the April-to-June period. However, this increase was in line with expectations.
Vacancies Decline
Additionally, the number of job vacancies from June to August decreased by 64,000 compared to the previous quarter. This further supports the notion of a slackening jobs market.
Impact on Bank of England
While the rise in the unemployment rate may be concerning for the Bank of England, the continued level of wage growth adds complexity to the situation. This could potentially influence the decision to raise the key rate at the central bank’s next meeting, taking place next week.
Inflation Data to Inform Decision
Inflation data for August, set to be released next Wednesday, will play a significant role in the Bank of England’s decision-making process. Their aim is to bring inflation back down to its 2% target.
