UK wage growth strongest since 2008 as labour market tightens

Bloomberg

Britons are enjoying the strongest wage growth since the financial crisis a decade ago as the labour market tightens. Average earnings excluding bonuses continued to increase an annual 3.3 percent in the three months through November and unemployment fell to 4 percent, matching the lowest rate since 1975, the Office for National Statistics said on Tuesday. Separate figures showed the budget deficit unexpectedly widened in December.
With earnings forecast to accelerate further, Bank of England policy makers might normally be preparing to raise interest rates to curb inflationary pressures building in labour market. But mounting concern that Britain could leave European Union with no deal is expected to stay their hand. Traders put the chance of a hike this year at less than 70 percent.
“UK wage growth continues to be a relative bright spot in an otherwise lackluster economic story,” said James Smith, a developed markets economist at ING Bank NV. “But the increasing uncertainty surrounding Brexit means the Bank of England is unlikely to hike rates any time soon.”
Wage growth including bonuses accelerated to 3.4 percent in the latest three months, the fastest pace since 2008. The number of people in work jumped a larger-than-forecast 141, 000, leaving the employment rate at a record 75.8 percent. Job creation was driven by full-time employment. Pay is rising in real terms. CPI inflation averaged 2.4 percent between September and November and slowed further to 2.3 percent in the fourth quarter, handing a boost to households still recovering from a protracted earnings squeeze.