Introduction: UK wage growth slows
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Wage growth across the UK has slowed, as companies cut the number of workers on their payrolls.
Data just released by the Office for National Statistics shows that regular pay (excluding bonuses) rose by 4.9% in the last quarter, down from 5.1% recorded in May-July.
Total earnings (including bonuses), rose by 3.8%, again slower than the 4.0% recorded a month ago. This growth rate is affected by the one-off bonus payments made to NHS and civil service staff in June, July and August 2023, the ONS points out.
This data is closely watched by the financial markets, as it will influence how quickly the Bank of England can lower UK interest rates.
Last night, a rate cut – from 5% to 4.75% – is seen as an 83% chance by the markets.
Although wage growth has slowed, earnings are still rising faster than inflation.
Using the CPI inflation measure, regular real pay rose by 2.6% on the year, lower than the previous three-month period when it was 3.0%. Total real pay rose by 1.7% on the year.
The ONS also estimates that the number of employees on company payrolls fell by 35,000 in August, and by another 15,000 in September (that’s an early estimate, though).
David Freeman, head of the ONS Labour Market and Household Division, says:
“Pay growth slowed again, with last year’s one-off payments made to many public sector workers continuing to affect the figures for total pay. However, earnings continue to rise faster than inflation.
“Over the last three months the number of people on payrolls has stayed broadly flat. The Labour Force Survey shows a different picture and we would advise caution when interpreting changes in these data while we continue to improve survey responses.
“Vacancies have fallen once more, with most industries seeing a fall on the quarter. However, the total still remains a little above its pre-pandemic level.”
The agenda
-
7am BST: UK labour market report
-
10am BST: ZEW economic sentiment index for Germany
-
10am IEA monthly oil Market Report
-
1.30pm NY Empire State Manufacturing Index
-
2pm BST: IMF begins publishing analytical chapters of its Global Financial Stability Report
-
2.30pm BST: World Bank to release report on poverty and prosperity
Key events
UK unemployment rate falls to 4%
The UK’s unemployment rate has fallen to its lowest since the start of this year, today’s labour force report shows.
The jobless rate has dipped to 4% in the June to August quarter, its lowest since the three months to January.
The number of people unemployed dropped to 1.386m, a fall of 141,000 in the quarter.
In contrast, the employment rate rose over the quarter, to 75%, up from 74.8% last month.
The economic inactivity rate (those neither working nor looking for work), slowed to 21.8% from 21.9%.
Introduction: UK wage growth slows
Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.
Wage growth across the UK has slowed, as companies cut the number of workers on their payrolls.
Data just released by the Office for National Statistics shows that regular pay (excluding bonuses) rose by 4.9% in the last quarter, down from 5.1% recorded in May-July.
Total earnings (including bonuses), rose by 3.8%, again slower than the 4.0% recorded a month ago. This growth rate is affected by the one-off bonus payments made to NHS and civil service staff in June, July and August 2023, the ONS points out.
This data is closely watched by the financial markets, as it will influence how quickly the Bank of England can lower UK interest rates.
Last night, a rate cut – from 5% to 4.75% – is seen as an 83% chance by the markets.
Although wage growth has slowed, earnings are still rising faster than inflation.
Using the CPI inflation measure, regular real pay rose by 2.6% on the year, lower than the previous three-month period when it was 3.0%. Total real pay rose by 1.7% on the year.
The ONS also estimates that the number of employees on company payrolls fell by 35,000 in August, and by another 15,000 in September (that’s an early estimate, though).
David Freeman, head of the ONS Labour Market and Household Division, says:
“Pay growth slowed again, with last year’s one-off payments made to many public sector workers continuing to affect the figures for total pay. However, earnings continue to rise faster than inflation.
“Over the last three months the number of people on payrolls has stayed broadly flat. The Labour Force Survey shows a different picture and we would advise caution when interpreting changes in these data while we continue to improve survey responses.
“Vacancies have fallen once more, with most industries seeing a fall on the quarter. However, the total still remains a little above its pre-pandemic level.”
The agenda
-
7am BST: UK labour market report
-
10am BST: ZEW economic sentiment index for Germany
-
10am IEA monthly oil Market Report
-
1.30pm NY Empire State Manufacturing Index
-
2pm BST: IMF begins publishing analytical chapters of its Global Financial Stability Report
-
2.30pm BST: World Bank to release report on poverty and prosperity
