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The recent decline in the number of job vacancies in the U.K. suggests upward pressure on wage growth from labor shortages is probably past its peak, Ashley Webb, economist at Capital Economics, writes in a note. However, a further fall in job vacancies is necessary for wage growth to slow from the current rate of 5.8%—on a three-month rolling basis—to rates of 3.0%-3.5% consistent with the Bank of England’s 2% inflation target, he writes. That could be triggered by a big rise in the supply of workers, but it is more likely to require weaker demand for labor, Webb adds. That is why the central bank will need to raise…
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