Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK wage growth slowed to the lowest rate in almost two years in the three months to June, according to official data, though the unemployment rate also fell.
Annual earnings growth, excluding bonuses, slowed to 5.4 per cent from a revised 5.8 per cent in the three months to May, the Office for National Statistics said on Tuesday.
This was in line with forecasts by economists polled by Reuters.
The statistics office also reported that the UK unemployment rate declined to 4.2 per cent in the three months to June, down 0.2 percentage points in the quarter.
Annual pay growth including bonuses slowed to 4.5 per cent from 5.7 per cent over the same period, in part due to one-off payment to NHS staff in June 2023 that was not repeated this year.
Sterling rallied after the data was released, increasing 0.23 per cent on the dollar to trade at $1.28.
Investors scaled back interest rate expectations slightly, continuing to price in one rate cut in November but attributing a lower probability to a second reduction in December.
Members of the Bank of England’s monetary policy committee closely monitor wage growth as a key indicator of domestic price pressures and inflation.
The BoE cut interest rates for the first time since the pandemic by a quarter of a percentage point to 5 per cent on August 1, but investors expect it will keep the benchmark rate on hold in September.
Chancellor of the exchequer Rachel Reeves MP said: “Today’s figures show there is more to do in supporting people into employment because if you can work, you should work.”
“This will be part of my Budget later in the year where I will be making difficult decisions on spending, welfare and tax to fix the foundations of our economy so we can rebuild Britain and make every part of our country better off,” she added.
This is a developing story
Credit: Source link
