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UK wage growth remained steady in the three months leading up to September, as hiring activity slowed down, according to official data that supports the Bank of England’s assessment that labor market pressures are gradually easing.
The Office for National Statistics reported on Tuesday that annual growth in average weekly earnings in the private sector stood at 4.8% in the three months to September, unchanged from the previous three-month period ending in August.
This figure marked the lowest growth rate since the winter of 2021-22 and aligned with the central bank’s recent forecasts following its decision to lower interest rates to 4.75% and signal a gradual approach to further easing.
In response to the data release, the pound sterling depreciated by 0.5% to $1.28.
Despite the data indicating a slowdown in wage growth, economists anticipate that the Bank of England may consider another interest rate cut in the upcoming year, following a potential pause at its December meeting.
Public sector wage growth, excluding bonuses, was recorded at 4.7% in the three months to September, slightly lower than the rate observed a month earlier.
The ONS also revealed a decline of 9,000 in payroll employment between August and September, with provisional data for October pointing to an additional decrease of 5,000.
Furthermore, vacancies decreased by 35,000 in August to October, with job opportunities dwindling across various sectors except for real estate and construction.
Despite challenges in data reliability due to survey response issues, changes in benefits claims rules, and other factors, experts believe that the labor market is experiencing a gradual cooling off period.
Rob Wood from Pantheon Macroeconomics highlighted that despite data challenges, the overall trend suggests a gradual increase in unemployment rates, slowing job growth, and a gradual decline in wage growth – factors that may influence the Monetary Policy Committee’s decision to continue cutting interest rates.