UK pay growth tops forecasts as labour market data shapes BoE rate outlook
Britain's wage growth remains above the level the Bank of England sees as consistent with stable inflation as policymakers prepare their latest rate decision. Average earnings excluding bonuses rise 3.4% in the three months to April, while unemployment stands at 4.9%, indicating a softer labour market than in recent years.
Highlights
- UK annual wage growth excluding bonuses reaches 3.4% in the three months to April, surpassing the 3.2% forecast.
- UK unemployment rate measures 4.9% in April, slightly below the expected 5.0%, ahead of the Bank of England's rate decision.
- The Bank of England is likely to keep rates at 3.75% as wage growth above 3% threatens its ability to achieve the 2% inflation target.
April labour data before rate decision
As reported by Reuters, official figures on Thursday show annual wage growth excluding bonuses at 3.4% in the three months to April, above economists' forecast of 3.2%, while the unemployment rate comes in at 4.9% against expectations of 5.0%. The figures are published hours before the Bank of England announces its next interest rate decision.The central bank is widely expected to leave interest rates unchanged at 3.75% later on Thursday. Policymakers largely view the UK job market as weaker than in recent years, a backdrop that reduces the likelihood of unusually strong pay increases.
Inflation risks and policy implications
The Bank of England is closely watching the labour market to assess whether higher oil prices linked to the Iran war cause stronger wage demands, or whether weak demand for workers limits employees' ability to negotiate higher pay.After Russia's full-scale invasion of Ukraine in 2022, inflation peaks at 11.1% and wage growth stays above 5% for nearly three years, complicating the Bank's effort to return inflation to its 2% target. The central bank judges that wage growth much above 3% makes it harder to secure 2% inflation on a lasting basis because productivity growth remains persistently weak.
Bank of England rate-hold expectations at 3.75% amid Iran-war inflation risks were the focus of our earlier coverage, as policymakers assessed whether energy-price swings could reignite price pressures. We also noted that UK inflation easing to 2.8% in May reduced the urgency for near-term tightening and weighed on Pound Sterling, with GBP/USD staying under bearish technical pressure.
Latest ONS News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
