- Written by Michael Reese
- Business correspondent, BBC News
Image source, Getty Images
Wage growth has slowed again in the UK labor market, but is still outpacing price rises, official figures show.
Wage growth, excluding bonuses, fell sharply from 7.3% to 6.6% in the three months to November.
There are also signs that the labor market is faltering, with the number of job openings falling for the 18th consecutive time.
Retail traders reported the biggest decline in job vacancies even though the sector heads into the key Christmas trading period.
Several major recruiting firms have recently warned of a slowing job market. Page Group, Hayes and Robert Walters said confidence was weak among employers, with Page noting that the UK was the worst performing market with profits falling by around a fifth.
Between October and December, the estimated number of job vacancies in the UK fell by 49,000 to 934,000, according to the Office for National Statistics (ONS).
But vacancies remain higher than levels seen before the Covid pandemic.
Grant Fitzner, chief economist at the Office for National Statistics, told the BBC’s Today program that there were signs that the labor market was “softening somewhat in recent months”, adding that the number of employers or companies reporting difficulties in recruiting had “declined”. significantly over the past year. .
Yael Selvin, chief economist at accountancy firm KPMG UK, said the slowdown in wage growth signaled “further weakness in the labor market to come”, while Neil Carbery, chief executive of the Employment and Employment Confederation, said: “The labor market now appears to be in a good position.” “. “In a state of confrontation with the broader economy, with both employers and candidates waiting to see how the economy develops before committing to new roles.”
Ms. Selvin said the “unique conditions” that fueled wage growth, such as strong demand for workers and demands for higher wages to keep pace with rising costs of living, “have subsided in recent months.”
She added that job openings are expected to decline further, which could drag down wage growth towards 2% by the end of the year. “This is likely to strengthen the case for lowering interest rates later this year,” she said.
The Bank of England has raised interest rates several times in an attempt to tackle inflation, although it has kept them at 5.25% – the highest level in 15 years – in recent months.
Inflation fell sharply, and financial markets, as well as some economists, indicated that the bank may cut interest rates soon.
But the bank will look closely at the fact that wage growth is outpacing price rises, and consider whether cutting interest rates could lead to higher inflation, which has reached 3.9%, nearly double the bank’s 2% target.
Annual public sector pay growth (6.6%) in the three months to November last year exceeded private sector pay increases (6.5%) for the first time since March 2021, the Office for National Statistics said.
Overall wage growth peaked at 7.9% in the three months to August last year, the highest level in “several decades”, according to the Office for National Statistics’ Mr Fitzner.
Treasurer Jeremy Hunt said that with inflation falling, “it is encouraging to see real wages grow for the fifth month in a row.”
Liz Kendall, Labour’s work and pensions secretary, said the UK remained the only advanced economy whose employment rate remained below pre-pandemic levels.
“There are 2.6 million people out of work due to long-term illness, an all-time high that is costing them and the taxpayer,” she said, adding that Labor would “address the root causes of economic inactivity.”
The latest figures showed that the unemployment rate was largely unchanged at 4.2%.
But Mr Fitzner said: “It is worth noting that although we have not seen a significant change in the unemployment rate in recent months, it is higher than it was at this time last year, so there has been some decline in the labor market with this being reflected in The unemployment rate is reflected in job vacancies.”
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