Breaking: UK's Wage Growth Hits Record High at 5.2%!

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UK wage growth exceeded expectations in the three months leading up to October, with average weekly earnings (excluding bonuses) rising to 5.2 percent from 4.9 percent in the previous quarter. Economists had anticipated a growth rate of 5 percent, but the actual figure surpassed these estimates.
The surge in wage growth was primarily driven by a 5.4 percent increase in the private sector, surpassing the threshold believed by the Bank of England to align with its 2 percent inflation target. Yael Selfin, chief economist at KPMG, noted that these figures would likely deter any immediate plans for the Monetary Policy Committee to lower borrowing costs.
Market traders adjusted their expectations for an interest rate cut this week, reducing the likelihood to about 10 percent. Despite these speculations, the pound remained relatively stable at $1.27.
Thomas Pugh, an economist at RSM UK, emphasized that the recent data solidifies the unlikelihood of an interest rate cut in the near future. While wage growth accelerates, hiring rates have slowed, with a decrease in the number of vacancies. Payrolled employees grew marginally between September and October, with an overall decline of 0.1 percent.
On the other hand, the unemployment rate held steady at 4.3 percent in the October quarter. Though employment remained at 74.9 percent, these figures have shown inconsistencies due to survey discrepancies. A separate report indicated an increase in the number of workforce jobs to 36.8 million in September 2024, following a 73,000 rise from the previous quarter.
Early data from November suggested a reduction in staffing levels post-Budget, although these figures are subject to revisions. Despite challenges in the economy, including two consecutive contractions amounting to a 0.1 percent decline in October, wage pressures persist for the Bank of England to navigate.