Annual growth in UK employee earnings, excluding bonuses, came in at 4.8% between the months of July and September this year, according to he latest figures from the Office for National Statistics (ONS).
While this is a 10 basis-point dip compared to the 4.9% growth seen between June and August, total earnings including bonuses increased by 50 basis points from 3.8% to 4.3%. However, this was impacted by a one-off payment made to the civil service in July and August 2023.
The number of payrolled employees UK fell by 9,000 (0.0%) between August and September 2024, but rose by 136,000 – or 0.4% – over the course of the year, from September 2023 and September 2024.
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The UK employment rate for people aged 16 to 64 years came in at 74.8% between July and September this year, which is an increase over the last quarter, but remains “largely unchanged” from a year ago.
Lindsay James, investment strategist at Quilter Investors, said: “Wage growth has been a real sticking point for the Bank of England, and though it remains well above the Bank’s 2% inflation target and this uptick will be unwelcome as far as the Bank is concerned, it is likely we will see a marked slowdown in the coming months.
“The changes announced at the recent Budget will see the government’s coffers receive a major boost from the increase in employer national insurance contributions from April 2025. While the government has not directly placed the tax burden on working people, the higher cost to business is very likely to need to be passed on to employees in one form or another, and we can expect to see a significant slowdown in employee pay increases as a result.”
She added that, while unemployment increased by more than expected to 4.3% in July to September, compared to 4% between June and August, the rate had previously remained “relatively stable” with today’s figures “buck[ing] the trend slightly”.
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“The Bank of England announced another 0.25% interest rate cut last week, leaving the base rate at 4.75%. However, the pace of future cuts is looking much less certain than it once was.
“Expectations for cuts have been scaled back considerably, and rates are now not expected to fall below 4% in 2025. Wage growth and unemployment will remain high on the Bank’s agenda, and we are likely to see a continuation of the slow and steady approach it is currently taking.”
