Annual growth in UK earnings reached 6.6% from September to the end of November last year, according to data from the Office for National Statistics (ONS) published today (16 January 2024). This marks a six percentage point fall compared to figures released over three months to the end of October, and comes in marginally below consensus estimates of 6.7%.
When taking inflation – including housing costs – into account, total pay increased by 1.3% on an annualised basis over the period, while regular pay ticked up by 1.4%. These figures have remained static since last month’s report was released.
Meanwhile, the ONS found the estimated number of payrolled employees for December last year fell by 24,000 from November’s figure of 30.2 million. The number of employees on the booked had also fallen by some 13,000 in last month’s figures.
Job vacancies fell by 49,000 to 934,000 over the quarter to December, but are still well above pre-pandemic levels of 133,000.
Charles Hepworth, investment director at GAM Investments, said wage growth falling 10 basis points below estimates was “not too far off the mark” and is “obviously subject to some revision”.
“What is important is how the Bank of England views this, as the bank was expecting pay growth to still remain higher at this point,” he explained. “The unemployment rate held steady at 4.2%. A softening in wage growth will hopefully help extinguish any fears of persistent vicious wage-inflation spirals. If anything, as wage growth cools, inflation should cool too in a virtuous spiral, but we are only still at the first part of that journey with wage growth still at the high-end for the Bank of England at least.”
He added: “Every journey starts with small steps and, as we see inflation approach, the Bank of England’s target, calls for rate cuts will grow ever louder.”
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