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Pay packets once again grew faster than the rate of price rises – which could influence how the Bank of England approaches interest rates.
By Sarah Taaffe-Maguire, Business reporter @taaffems
Wage growth has slowed but still remains well above the rate of inflation while unemployment is unchanged, according to official figures.
Average weekly wage growth, which excludes bonuses, eased to 6.6% in the three months to November, from 7.3% a month earlier, the Office for National Statistics (ONS) said.
It means pay packets grew faster than the rate of price rises, which stood at a more than two-year low of 3.9% up to November. When bonuses were factored in, pay grew 6.5%.
November also had the lowest number of strike days for 18 months due to a slowdown in health sector industrial action as some NHS walkouts paused and consultants agreed a new pay deal.
The rate of unemployment also remained at 4.2%, still historically low. A slight uptick, to 4.3%, had been expected by economists polled by Reuters.
Low unemployment and high job vacancies had led wages to grow at a record pace.
The slowed wage growth released on Tuesday will be of note to the interest rate setters at the Bank of England.
The regulator had been increasing interest rates to reduce inflation with Governor Andrew Bailey having described wage rises over the summer as “unsustainable”.
Cooling labour market is what Bank of England needs to see
The number of job vacancies dropped to 934,000, as businesses reduced their hiring rate. It was the 18th consecutive period of vacancy contraction – the longest consecutive run of quarterly falls but still above pre-COVID-19 pandemic levels.
A new way of crunching the labour market numbers was adopted by the ONS late last year in an effort to ensure increased accuracy, as the organisation found it harder to engage with enough people in certain groups.
Unemployment is calculated by the number of people claiming unemployment benefits and wages are tracked by looking at changes in the payroll employee data.
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Responding to the ONS figures, Chancellor Jeremy Hunt said: “It has been tough for many families recently, but with inflation now falling and the economy gradually returning to growth today’s continuing rise in real wages will offer further relief.
“On top of this, the cut in National Insurance contributions will get more people back into the jobs market, not just supporting economic growth but saving a typical two-earner household around £1,000 this year.”
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