The Office for National Statistics said annual growth in average pay, excluding bonuses, remained at 7.8 per cent — the highest rate since comparable records began in 2001. Here are some of the key takeaways from the data for the three months to July 2023:
- UK wages grew at the fastest pace on record, despite a weaker jobs market.
- Annual growth in average pay, excluding bonuses, remained at 7.8 per cent — the highest rate since comparable records began in 2001.
- Total pay grew 8.5 per cent, boosted by one-off payments to NHS workers and civil servants.
- Average wages are now growing faster than consumer prices, which rose 6.8 per cent in the year to July.
- The Bank of England is concerned that high wage growth will reinforce inflationary pressures.
- The pound fell and gilt yields edged down in the aftermath of the data release.
- Investors expect the BoE to increase rates by 0.25 percentage points next week, but are evenly split on the chances of one further rate increase later in the year.
- The UK’s persistently high wage growth probably means the BoE “can’t stop raising the bank rate at next week’s meeting, but the end of the tightening cycle is not far off now”.
- Unemployment rose to 4.3 per cent in the three months to July, up from 4.2 per cent last month and above the BoE’s latest forecast of 4.1 per cent for the third quarter.
- Employment fell more sharply than analysts had expected, down by 207,000 from the previous three-month period.
Overall, the data suggests that the UK labour market is cooling, but that wage growth remains strong. This is a positive development for workers, but it could also lead to higher inflation in the near term. The Bank of England is likely to continue raising interest rates in an effort to bring inflation under control.