UK wages rose at their fastest pace in over a year in the third quarter, adding to the inflationary pressures worrying the Bank of England.
Average weekly earnings excluding bonuses rose 5.7 percent from a year earlier, the highest since August 2021, the Office for National Statistics said on Tuesday. That was stronger than the 5.5 percent pace economists had been expecting.
The figures underscore that the central bank should continue to raise interest rates. Policymakers are trying to avoid a wage-price spiral after consumer prices rose 10.1%, the highest in four decades.
Chancellor of the Exchequer Jeremy Hunt hailed the numbers as a strong point in the UK economy but noted that tackling inflation is a growing priority.
“Unemployment remains near record lows – it provides security for families and is a testament to the resilience of the UK economy even in the face of severe global challenges,” Hunt said in a statement. “I understand that people’s hard-earned money isn’t going as far as it should.”
The job market continues to tighten even as the economy slips into recession. This has prompted companies to pay more to recruit staff to fill vacancies.
Private sector salaries are growing at an all-time high outside of the pandemic, rising 6.6 percent. The ONS also recorded the largest gap between public sector and private company salaries.
The tightening job market has been fueled by the loss of over half a million workers over the past two years. Inactivity – people not working or looking for a job – rose again between July and September, to 21.6 percent of working-age adults. This put the number of people who have been inactive since the pandemic at over 600,000.
Unemployment rose unexpectedly to 3.6 percent as the workforce fell by 52,000 in the quarter to September.
Job vacancies fell to 1.23 million for the fourth straight month in the three months to October. That’s 46,000 fewer than the May-July period, but still means there is at least one job for every person classified as unemployed.
There were some early signs of potential weakness in the numbers. Layoffs rose 40 percent to 75,000 in the third quarter. It was the third increase in as many months.
The BOE expects unemployment to rise above 6 percent in the next three years. However, companies’ immediate response to the downturn could be to freeze hiring rather than actively shedding jobs.
https://www.independent.ie/business/world/uk-labour-market-feeds-inflation-pressure-with-jump-in-wages-42144948.html The UK labor market is fueling inflationary pressures as wages rise