3 hours ago
Annual growth in UK wages slowed at the start of the year, falling short of expectations and signaling a cooling labour market as policymakers consider new inflation risks.
Regular pay, which excludes bonuses, increased by 3.8% in the three months to January, according to the Office for National Statistics (ONS). When adjusted for inflation using the consumer prices index, earnings rose by 0.5% over the same period.
This figure was below economists’ forecasts polled by Reuters, who had predicted 4% growth.
Until recently, the Bank of England had been assessing whether persistent labour market inflationary pressures or a recent slowdown in hiring posed the greater economic risk. However, a renewed rise in energy prices following the outbreak of war in the Middle East has heightened concerns about inflation.
In this context, the central bank is now widely expected to keep borrowing costs unchanged when it announces its latest decision at midday today, concluding its March monetary policy committee meeting. Expectations had shifted in recent weeks from a predicted quarter-point rate cut.
Separate data showed the unemployment rate remained steady at 5.2% in the three months to January, the statistics office reported.
Commenting on the labour market figures, ONS director of economic statistics Liz McKeown said: “Labour market conditions were little changed at the start of the year. The number of workers on payroll rose slightly in the latest month but, overall, the recent picture has been broadly flat.
“Unemployment remains at the rate reported last month, up on the quarter and the year, while the number of vacancies remains largely stable, with declines among smaller firms being offset by rises among larger ones.
“Regular wage growth is at its lowest rate in more than five years, with pay growth in both the private and public sectors continuing to ease.”
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