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UK wage growth picks up due to bigger bonuses

Staff Writer |
UK wage growth and employment levels are picking up more than expected, though there may be enough holes in the numbers for the Bank of England to "look through" the data and avoid raising interest rates yet.

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UK average weekly earnings in the three months to January rose 2.8% compared to the same period last year, which was higher than the 2.6% that economists had forecast and was up the figure from a month earlier, which was revised up to 2.7% from 2.6%.

The Office for National Statistics revealed that wages excluding bonuses, the measure that the BoE rate setting committee has been focusing on ahead of this week's policy meeting, revealed wages grew 2.6%, as expected, up from 2.5% previously.

On a month-to-month basis, basic wages in January were up just 0.13%, or 1.6% year-on-year, which was the smallest increase since February last year.

Real incomes still remain negative, as pay growth was still lagging the 3% rate of CPI inflation in the three months to January.

The headline ILO unemployment rate for the three month period fell back to 4.3% from 4.4%, though the market expected it to have stayed unchanged. There were 1.45m unemployed people, 24,000 more than for the preceding three-month period in 2017 but 127,000 fewer than for the period to January last year.

Employment increased by 168,000, double the consensus estimate and the figure from the previous period.

For more timely data, February's claimant count rate rose to 2.4% from 2.3% in January, while jobless claims in February were up 9,200 after the previous month was revised to a decline of 1,600.

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