UK Wage Growth Slows, Jobless Rate Stable At 4.2%

The UK wage growth slowed more than expected in three months to October raising expectations that the Bank of England will cut interest rates as early as next June.

Data from the Office for National Statistics showed that the unemployment rate stood at 4.2 percent in three months to October. This was unchanged from the preceding period and also matched expectations.

Excluding bonus, average earnings increased at a slower pace of 7.3 percent in three months to October after a 7.8 percent gain. Earnings were expected to climb 7.4 percent.

Including bonus, average earnings advanced 7.2 percent annually, slower than the revised 8.0 percent rise in the prior period and also economists’ forecast of 7.7 percent.

Nearly 131,000 working days were lost in October because of labor disputes. Three-fifths of the labor disputes were in the health and social work sector.

The number of workforce jobs climbed 210,000 to a record 36.8 million in September
The number of payrolled employees decreased 13,000 to 30.2 million in November. Employment had increased by 39,000 in October.

Vacancies declined 45,000 on quarter to 949,000 in three months to November. The ONS said vacancies dropped for the 17th consecutive period, which is the longest run of fall ever recorded but still above pre-pandemic levels.

Although the labor market remains tight by historical standards the sharp fall in wage growth will reinforce the growing belief in markets that interest rate cuts will start sooner rather than later, Capital Economics’ economist Ashley Webb said.

The BoE is widely expected to keep the benchmark rate unchanged at 5.25 percent for the third straight session this week. The announcement is due on December 14.

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