U.K. Wage Growth Accelerates, Signaling End to Yearlong Squeeze
Wednesday, 21 March 2018 17:02 WIB |
ECONOMY |Ekonomi inggris
U.K. wages are rising at their fastest pace since the end of 2016, signaling the yearlong squeeze on living standards is coming to an end.
Basic wage growth accelerated to 2.6 percent in the three months through January, the Office for National Statistics said Wednesday. It came as the employment rate returned to a record high and the jobless rate fell to 4.3 percent to match the lowest since 1975.
The pickup is good news for households, whose spending power been eroded by the jump in prices since the 2016 Brexit referendum. With the inflation rate dropping to 2.7 percent in February and predicted to keep falling, economists say a return to real wage growth is in sight.
Including bonuses wage growth accelerated to 2.8 percent, the most since 2015, underscoring the tightness of the labor market. Surveys suggest recruitment difficulties and past inflation are forcing firms to pay rates during the key period for wage bargaining.
That's expected to prompt the Bank of England to raise interest rates in May to head off a buildup of home-grown inflation. Policy makers will announce their latest decision at noon on Thursday.
The number of people in work rose a larger-than-expected 168,000 between November and January to a record high. Unemployment rose by 24,000, but the increase was due to the participation rate rising to a record. Inactivity -- people neither in work nor looking for a job -- fell by 136,000, the most since 2012.
Basic pay growth was fastest in the private sector in the latest three months, up 2.7 percent. In February alone, total wages rose 2.8 percent on the year.
While the pickup partly reflects weakness a year earlier, upward pressure is expected to persist, with a 4.4 percent increase in the minimum wage due to come into effect in April and the government signaling an end of the longstanding cap on public-sector pay rises.
Source : Bloomberg