UK wage growth accelerates to 5.2%

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UK wage growth accelerated more than forecast in the three months to October, bolstering expectations that the Bank of England will end rate cuts this week.

Average weekly earnings growth, excluding bonuses, rose to 5.2 percent from 4.9 percent in the three months to September. Office for National Statistics said on Tuesday. That figure was higher than the 5 percent expected by economists.

The acceleration was driven by private sector growth of 5.4 percent, above the level the WB believes is compatible with reaching its 2 percent inflation target.

Yael Selfin, chief economist at KPMG, said the figures would “close the door” on any possibility of the Monetary Policy Committee lowering borrowing costs below 4.75 percent when it announces its latest decision on Thursday.

After the data, traders cut their bets on a quarter-point cut to about 10 percent this week, in line with levels implied in swaps markets.

Sterling was little changed at $1.27 in early trade.

Thomas Pugh, an economist at audit firm RSM UK, said the figures were the “nail in the coffin” on the prospect of a rate cut this week.

Meanwhile, job hiring continued to slow over the period, with job vacancies falling.

The number of people in paid employment rose by just 0.1 per cent between September and October, ONS data showed, leaving the total number of people in paid employment down 0.1 per cent in the three months to October.

The ONS said the unemployment rate was unchanged at 4.3 per cent in the three months to October and employment at 74.9 per cent, but these measures have been unreliable over the past year due to issues with their underlying query.

A separate quarterly survey of employers, released as part of Tuesday’s data release, showed the number of jobs in the labor force totaled 36.8 million in September 2024, up 73,000 from June 2024.

Initial data for November showed that employers cut staff after the budget, but these figures are subject to revision.

The BoE is grappling with persistent wage pressures even as the economy slows.The economy unexpectedly shrank by 0.1 percent in October, the second consecutive contraction, a blow to the Labor government’s ambitions to boost growth.