UK Wage Growth Slows Amid Cooling Labor Market

UK wage growth eased in the third quarter and vacancies declined further reflecting the loosening labor market conditions, data from the Office for National Statistics showed on Tuesday.

Excluding bonuses, regular pay growth was 7.7 percent in the three months to September, in line with expectations but slower than the revised 7.9 percent rise in the period through August.

Although this was slightly down on the previous periods, it remains among the highest growth rates since records began in 2001, the ONS said.

Including bonuses, average earnings increased 7.9 percent as the total growth was affected by the civil service one-off payments made in July and August.

Nonetheless, the rate of growth was above economists’ forecast of 7.4 percent.

Private sector regular pay growth slid to 7.8 percent from 8.1 percent in the previous period.

“With wage growth continuing to ease and signs that a further loosening in labor demand lies ahead, higher interest rates appear to be gradually working”, Capital Economics economist Ashley Webb said.

The economist added that wage growth will slow only gradually suggesting that the Bank of England would keep interest rates unchanged at 5.25 percent until late 2024.

BoE’s forecast for private sector wage growth to hit 6.6 percent in March appears to be on track, and if anything, might be beaten on the downside, ING economist James Smith said.

The unemployment rate was 4.2 percent, which was largely unchanged from the previous quarter, data showed.

Payroll employment increased 33,000 from September to 30.2 million. The ONS revised payrolled employee growth from a decrease of 11,000 to an increase of 32,000.

In the three months to October, vacancies decreased by 58,000 on the quarter to 957,000.

In October, the claimant count remained unchanged at 4.0 percent. The number of people claiming jobless benefits increased by 17,800 from the previous month.

Data showed that about 229,000 working days were lost because of labor disputes across the UK in September.

The majority of the strikes were in the health and social work and education sectors.

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