Prospect of interest rate cut in focus as pace of wage increases slows

Business

The pace of wage growth has eased back from a record level, according to official figures that also showed no change in the UK’s jobless rate despite the tough economy.

The Office for National Statistics (ONS) reported that average wages excluding bonuses were 7.7% higher than a year earlier in the three months to September.

That was down from the 7.8% level registered last month.

The easing, while slight, will be welcomed by the Bank of England which sees high wage growth as an inflation threat.

It has twice held off on a further interest rate rise since September due to evidence its 14 consecutive hikes, aimed at taming the pace of price increases, is having the desired effect.

The employment data, though, currently comes with a big health warning.

That is because the ONS is working hard to bolster participation rates for its Labour Force Survey, which is the backbone of the employment figures.

Falling response volumes have knocked the perceived accuracy of the estimates.

The ONS has responded with a series of measures including the return of in-home interviews and re-contacting households that fail to respond.

The problems mean that for a second successive month, the report is incomplete.

It is a crucial tool for providing an overview of the UK labour market and forms a big part of decision making at the Bank of England when deciding interest rate levels.

The ONS figures showed the UK’s unemployment rate remained static at 4.2%.

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