UK wage growth steadies

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UK wage growth steadied in the three months to September as hiring stalled, according to official data that will reassure Bank of England policymakers that pressures in the labour market are easing.

Annual growth in average weekly earnings in the private sector was 4.8 per cent in the three months to September, unchanged from the three month period to August, the Office for National Statistics said on Tuesday.

The figures were the lowest since the winter of 2021-2022 and were in line with the central bank’s latest forecasts.

The BoE last week cut interest rates to 4.75 per cent but signalled that a further move is unlikely before early 2025.

Following the release of the data, sterling dropped 0.5 per cent to $1.28. The yield on the two-year gilt was little changed at 4.41 per cent.

Paul Dales, at the consultancy Capital Economics, said the steadying of pay growth in private sector pay suggested that the BoE would continue to lower borrowing costs gradually.

Public sector wage growth, excluding bonuses, has been boosted by pay deals reached over the summer and was 4.7 per cent in the three months to September, down from 5.2 per cent a month earlier.

The data from the ONS came as tax records showed the number of payrolled employees fell by 9,000 between August and September, with provisional figures for October pointing to a further decline of 5,000.

Ben Harrison, director of the Work Foundation at Lancaster University, said that with Budget changes to payroll taxes and the minimum wage set to kick in, “we could see further cooling of the jobs market as some employers will lack confidence to employ more people as their overheads rise”.

Separate figures based on the ONS’ labour force survey showed a rise in unemployment to 4.3 per cent in the three months to September, from 4 per cent just a month earlier. The claimant count, which reflects claims for unemployment benefits, also rose in October — both on the month and on the year — to stand at 1.806mn.

However, both these measures are unreliable at the moment as the ONS has been struggling to repair the LFS after a sharp decline in responses to the survey, and because of changes in the rules for benefits claims.