UK wages rise more than expected, unemployment rate stays unchanged

Friday, 14 November 2014 03:04 - - {{hitsCtrl.values.hits}}

Reuters: The earnings of British workers overtook inflation in September, according to one measure of pay growth, while unemployment failed to fall for first time since the start of 2014, official data showed. The Bank of England, which is due to give its latest assessment on Britain’s economy later on Wednesday, is keeping a close eye on labour costs as it considers when to start raising interest rates. Britain’s jobless rate remained unchanged at 6.0% between July and September, matching its lowest level in six years, the Office for National Statistics said. Economists had expected the rate to fall to 5.9%. Unemployment has fallen sharply since the middle of last year, but earnings have so far largely failed to pick up as a surge of people seeking work has allowed employers to keep a lid on pay.

Pay has lagged inflation for most of the period since the financial crisis in 2008. But in recent months, price growth has slowed sharply while earnings have picked up a touch, narrowing the difference. In the July-September period, total average weekly earnings, excluding bonuses, rose by 1.3%, picking up speed from an increase of 0.9% in the three months to August. Inflation in the month of September alone fell to a five-year low of 1.2%. The ONS said it was the first time that regular pay had outstripped inflation by that measure since the July-September period of 2009. Total pay, including bonuses, pay rose 1.0%, compared with a gain of 0.7% in the June-August period. Economists taking part in a Reuters poll had expected earnings in the quarter to rise by 1.1% when excluding bonuses and by 0.8% on a total basis. In the month of September alone average weekly earnings, excluding bonuses jumped 1.8% compared with the same month last year. Including bonuses, pay edged up by 1.4% during the month, the ONS said. The signs of a pick-up in pay are likely to be welcomed by Prime Minister David Cameron. Britain’s opposition Labour party has put the issue of stretched living standards at the centre of its message to voters ahead of next May’s national election. The ONS said the number of people in employment rose by 112,000 to 30.793 million in the three months through September. Employment growth has slowed since hitting a record 307,000 in the February-April period of this year. A fall of 115,000 unemployed people in the July-September period was the smallest decline since the three months to February this year. The number of people claiming unemployment benefit in the month of October fell by 20,400, a bit less than economists forecasts, compared with a revised 18,400 in September.