POST Online Media Lite Edition



 

UK wage growth slows, jobless claimant count drops

Staff Writer |
UK wage growth surprisingly slowed in December as the labour market otherwise improved slightly, according to data from the Office for National Statistics.

Article continues below






The headline unemployment rate remained at 4.8%, as expected, and with employment improving by 37,000 in the three months to December total employment reached a new record high of 74.6%.

More timely data, in the form of the jobless claimant count showed a big drop of 42.4K versus the 20.5K fall in December, while the forecast had been for a small 1K rise.

The ONS said the labour market "appears to be edging towards full capacity", also noting that the employment rate rate for women reached 70% for the first time on record.

However, average earnings including bonuses slowed to 2.6% in December from the previous 2.8%, noticeably short of the 2.8% consensus forecast. Excluding bonuses, wages fell to 2.6% from 2.7%, when no change was again forecast.

Furthermore, year-over-year growth in average weekly wages fell to 1.9% in December, the lowest rate since February, from 2.9% in November.

Following Tuesday's news that CPI inflation jumped to 1.8%, the unexpected dip in wage growth means real wage growth continues for now but is experiencing the beginnings of a squeeze.

The Bank of England forecasts inflation this year will average 2.7%, meaning a continued deceleration in pay growth could see real wages fall, which would squeeze household budgets as the year goes on.

Long dated gilt yields declined and sterling fell 0.3% against the dollar on the news.


What to read next

UK jobless rate lowest since 1975
UK wages rise as ILO unemployment stable
UK unemployment rate fell unexpectedly