UK wage growth accelerates to 5.2%

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UK wage growth accelerated to 5.2 per cent in the three months to October, cementing expectations that the Bank of England will hold off cutting interest rates this week.

The Office for National Statistics said growth in average weekly earnings, excluding bonuses, quickened from 4.9 per cent in the three months to September, and was above economists’ expectations of 5 per cent.

The ONS said the increase was driven by private sector wage growth, which at 5.4 per cent is running well above the level the BoE believes is compatible with meeting its 2 per cent target inflation target.

Yael Selfin, chief economist at KPMG, said rising pay growth would “close the door” on any chance of the BoE’s monetary policy committee cutting interest rates from their current level of 4.75 per cent when it meets on Thursday.

Meanwhile, hiring continued to slow, with the number of vacancies declining.

The number of payrolled employees grew by 0.1 per cent between September and October, taking the overall change over the three-month period to a dip of 0.1 per cent.

The annual growth rate in payroll employment continued to slow, the ONS said, with the figure 0.5 per cent higher than in October 2023. Early data for November suggested employers had cut staffing following the Budget, but these figures are subject to revision.

The ONS said the unemployment rate was unchanged at 4.3 per cent in the three months to October, with employment steady at 74.9 per cent, but these measures have been unreliable over the past year because of problems with the survey underpinning them.

A separate quarterly survey of employers, published as part of Tuesday’s data release, showed that the number of workforce jobs was 36.8mn in September 2024, an increase of 73,000 from June 2024.