British payment growth was accelerated at the end of 2024, according to data that suggested the work market to survive and underline why the Bank of England was careful about cutting interest rates despite the weak economy.
Private sector payments do not include Boe’s main bonuses from domestic-nair inflation pressure 6.2% compared to the same period the previous year, the fastest speed in a year, the National Statistics Office said.
Sterling rose against dollars and investors to cut their betting with the speed of Boe -level cutting in the future after the release of official data, which painted a less weak picture of the labor market than some new surveys.
Still, James Smith’s economist can change.
“The level of redundancy is low, but the main risk is what began to change before the tax increase in spring. The cooler job market must help gradually the growth of wages is lower as time goes by, “he said.
Employers said the Minister of Finance plan Rachel Reeves to increase the contribution of the social security they paid from April – when the British minimum wage would also increase by almost 7% – would reduce recruitment and wage growth.
However, the rate of salary increases remains far above the level consistent with the 2% Boe inflation target.
Head of Economist Boe Huw Pill told Reuters last week that he believed the main problem for the slow British economy remains one of the supplies – including lack of workers.
ONS said salary throughout the economy, not including bonuses, was 5.9% higher in the fourth quarter of the previous year, the strongest reading from three months to April 2024. Including bonuses, salaries rose by 6.0%, fastest since the end of 2023.
Reuters’ polls have shown both wage steps rose by 5.9%.
Boe hopes that salary increases will soon slow down after weaknesses in the economy burden the labor market. Tuesday wage growth data is mostly in line with the estimation.
The economy was stagnant in the third quarter of 2024 but unexpectedly grew 0.1% in the last three months this year.
A survey issued on Monday showed that around one in three entrepreneurs planned to cut the number of employees when they responded to reeves’ tax increases.
Tuesday official data shows that vacancies fell 9,000 in three months to January from three months to October but still 23,000 higher than immediately before Pandemi Covid.
Separate data provided by the entrepreneur to the Tax Authority shows the number of employees rose 21,000 in January from December, only the third increase in the last eight months.
British unemployment rate, based on a survey that ONS is overhauling and is no longer considered an accurate gauge, held by 4.4%.
Allan Monks, an economist at JP Morgan, said the data reduced some risk of economic decline but highlighted the British problem about the underlying price pressure “sticky”, making Boe unable to move quickly by decreasing interest rates.
“This must strengthen the feeling that the MPC (Monetary Policy Committee) will continue to facilitate but only gradually in the coming period,” Monks said.
Source: Reuters
