UK wage growth has risen for the first time in over a year, despite signs of a job market slowdown linked to uncertainties from recent Budget measures.
Official data reveals that regular earnings growth surged to 5.2% in the three months leading up to October, marking an increase from the previous 4.9% and the first rise since August of the previous year.
Earnings growth outpaced Consumer Prices Index (CPI) inflation by 3% during the same period.
The Office for National Statistics (ONS) estimates a decrease of 35,000 people on UK payrolls between October and November, bringing the total to 30.4 million, although this figure may be revised.
Additionally, the number of job vacancies dropped by 31,000 to 818,000 in the three months to November. Unemployment rates remained steady at 4.3% in the three months to October, but the ONS advises caution due to changes in the jobs survey.
It comes as there are fears over an impact on hiring and jobs after the Budget announced steep increases in employers’ national insurance contributions and a minimum wage rise next year.
These figures are under close scrutiny ahead of the Bank of England’s interest rate decision on Thursday, with the uptick in wages bolstering expectations that the base rate will remain at 4.75%.
Liz McKeown, the ONS director of economic statistics, commented on the recent pay trends, observing: “After slowing steadily for over a year, growth in pay excluding bonuses increased slightly in the latest period, driven by stronger growth in private sector pay.”
On payrolls, she added: “We have seen annual growth rates continue to slow, showing a consistent trend with our latest jobs data from employers.”
She also noted fluctuations in job opportunities, stating: “The number of job vacancies has also fallen again, though the total remains a little above where it was before the pandemic.”
Gora Suri, economist at PwC UK, said the rise in earnings growth shows that inflation pressures remain in the economy.
He said: “Despite the considerable disinflation we have seen in the UK economy over the last two years, these underlying inflationary pressures remain.
“This means that the Bank of England is highly likely to keep interest rates on hold at its next meeting on Thursday, before resuming rate cuts in the new year.”
The latest figures show that regular earnings growth in the private sector rose to 5.4% in the three months to October, which is the highest since May. Public sector pay growth stood at 4.3% in the latest period.
Earnings growth had been falling steadily since reaching a peak in August last year, when regular wages rose by 7.9%.
But while the recent uptick is good news for workers, it shows the pressure on businesses ahead of further significant increases to their wage bills from next April.
Liberal Democrat Treasury spokeswoman Daisy Cooper has voiced concerns over tax anxiety during the holidays, stating: “Over the Christmas period no one should have to worry about the impact that an impending tax rise may have on their employment.”
She added: “The new Government must see sense and realise that their self-defeating hike in national insurance will only make the situation worse for health services and high streets.”
