The Bank of England is debating whether or not to reduce interest rates in the next month. This slowdown in wage growth in Britain in May was the lowest in almost two years.
According to official figures, the average weekly income, excluding bonuses and other incentives, dropped from 6% to 5.7% in the three-month period ending in May. This was in line with expectations of economists. This was the lowest rate since September 2022. The total earnings, including bonuses, also increased by 5.7%. This is down from the 5.9% in the rolling three-month period before.
According to the Office for National Statistics, the unemployment rate remained unchanged in May at 4.4%.
The majority of nine rate-setters in the Bank’s monetary committee said they needed to see more evidence that wages were declining in a sustained manner to justify the first cut in interest rates in four years.
figures on inflation revealed that a key measure for prices in the service sector was unchanged in June at 5.7%, while headline inflation remained within the Bank’s target of 2 percent.
The number of job vacancies has fallen again to 889,000, the lowest level in three years. This is a sign that the jobs market is cooling. In May, the employment rate dropped to 74.4 percent and the inactivity, which is the percentage of people in working age who are not on the job market, fell to 22.1% from 22.2%.
The ONS stated that “this month’s labour figures continue to show gradual cooling with the number vacancies falling and unemployment increasing.” “Earnings are still growing, but at a slower pace than in recent months.”
Since last year, the ONS’s measure for unemployment and employment has been plagued with low response rates. This casts doubt on the veracity and accuracy of official figures which are an important input to the Bank’s outlooks on inflation and state of the economy. The statistics body warned that its figures should be “treated with extra caution” when it launches a new labour force survey in the second half of this year.
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