Wednesday’s unemployment figures show that Britiain’s jobs recovery is strengthening but wage growth has slowed significantly, as Bank of England governor Mark Carney and other policymakers continue to grapple with the amount of spare capacity in the economy.
FTAdviser sister title FastFT reports the UK’s headline rate of unemployment fell to 6.6 per cent in the three months through April, in the latest sign that Britain’s labour market is gaining steam as employers feel more confident about adding jobs. That’s down from the 6.8 per cent recorded in the first quarter, and the lowest level in more than five years.
But the data also show that average weekly earnings rose just 0.7 per cent, including bonuses, significantly lower than the pace of inflation and down from last month’s 1.7 per cent - although that number partly reflects a strong comparison from the year earlier period, when bonuses were pushed into April to take advantage of a cut in the top rate of income tax.
Excluding bonuses, average earnings were up 0.9 per cent, falling well short of analysts’ estimates of 1.2 per cent growth.
The Bank of England has pledged to keep interest rates at rock bottom levels even amid signs that the UK’s revovering is continuing to accelerate.
Many economists now expect the BoE to start hiking rates in early 2015, albeit a gradual pace.
Sterling ticked up 0.15 per cent, at $1.6780.
