UK wages growth slows as jobless rate stays at 5.6%
Growth in average weekly earnings in the three months to June slumped to 2.4% on the year, slowing down from 3.2% in the three months to May, below economists’ forecasts of 2.8% in a Reuters poll.
The UK Office for National Statistics also said Britain’s unemployment rate held steady, at 5.6%, after an unexpected rise in the three months to May. May’s increase in unemployment was the first since early 2013, and left economists unsure whether Britain’s recovery was weakening, or if this was a brief hiccup, as employers hunted for better-qualified staff.
The Bank of England is eyeing Britain’s labour market, as it judges when to raise interest rates for the first time since the start of the financial crisis in 2008.
Wages have picked up more quickly than the Bank of England expected earlier this year, but, last week, the bank said this was partly mitigated by stronger productivity and the fact that wage rises were driven by higher bonuses, which could be temporary.
Markets pushed back expectations for an interest rate rise in Britain last week, after only one Bank of England official voted for a rise in borrowing costs against expectations that two or more would do so.
The number of people in employment fell on the quarter, to 31.035m, in the second quarter of 2015, down 63,000 from the calendar quarter record in the first three months of 2015.
Excluding bonuses, average weekly earnings growth held steady at 2.8% in the three months to June, as expected. This rate was last higher in early 2009.
Inflation, as measured by the consumer-prices index, fell to zero percent in June.
The combination of rising earnings and subdued inflation is boosting the spending power of households, which saw their real income hurt by five years of wages rising less than inflation.
The number of people claiming unemployment benefits dropped by 4,900, to 792,400, in July, after a small increase in June.
Reuters
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