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UK wage growth unexpectedly slows even as job creation booms

The slowdown came despite another big increase in the number of people in work.


Reuters Last Updated at 12 Jun 2018, 14:06 IST United Kingdom
UK wage growth unexpectedly slows even as job creation booms
  • Excluding bonuses, earnings also showed slower growth, rising 2.8 percent year-on-year against expectations of 2.9 percent. (Image Credit: Flickr)

British workers' wages grew more slowly in the three months to April, according to official data published on Tuesday which could further douse expectations that the Bank of England will raise interest rates as soon as August.

Total earnings, including bonuses, rose by an annual 2.5 percent, the Office for National Statistics said, down from growth of 2.6 percent in the three months to March.

Economists polled by Reuters had mostly forecast growth of 2.6 percent again.

The slowdown came despite another big increase in the number of people in work.

Excluding bonuses, earnings also showed slower growth, rising 2.8 percent year-on-year against expectations of 2.9 percent.

In the month of April alone - which is often when companies give staff their annual pay rise - total pay and regular pay rose by 2.5 percent, the ONS said.

The BoE says it expects wage growth to pick up speed gradually over the next three years, a big reason why it has said it is likely to raise interest rates over the period.

But last month it said it wanted to be sure that the economy had recovered from its near-stagnation in an unusually cold early 2018. Data published on Monday showed British factories had a weak April.

The ONS said on Tuesday that the unemployment rate held at its four-decade low of 4.2 percent in the three months to April, as expected in the Reuters poll of economists.

The number of people in work rose by a larger than expected 146,000. The Reuters poll of economists had pointed to a rise of 110,000.

British households - whose spending is the main driver of the country's economy - struggled last year from the double whammy of slow wage growth and a jump in inflation, due in large part to the fall in the value of the pound after the 2016 Brexit vote.

With unemployment so low, employers have generally been raising pay for staff more quickly, albeit still more slowly than increases of about 4 percent a year that were typical before the global financial crisis.

Data due on Wednesday is expected to show Britain's consumer price inflation edged back up to 2.5 percent in May but remains well below a five-year peak of 3.1 percent set in November.

The BoE said in May that it expected pay growth of 2.75 percent a year by the end of 2018, rising to 3.5 percent by the end of 2020.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

COUNTRY :
United Kingdom

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