News

UK wage growth at 5 year high

UK wage growth rose at its fastest pace in five years in the quarter to May, though an unexpected increase in the unemployment rate pushed down the pound on Wednesday [1].

According to the Guardian, economists polled by Reuters have pencilled in a 3.3% annual rise in average wages during the three months to May.

The data, due at 9.30am, is keenly awaited by financial markets after several Bank of England policymakers raised concerns that stronger pay growth could have knock-on effects for more general inflation which would warrant an interest rate rise [2].

Two Bank of England policymakers, including Governor Mark Carney, said on Tuesday that the point at which interest rates would start to rise was “moving closer” [1].

An article by Reuters has reported that despite the improvements in UK wage growth, Britain’s unemployment rate unexpectedly rose for the first time since 2013 in the three months to May, official data showed today.

The ONS said the unemployment rate rose to 5.6% from 5.5% in the three months to April as the number of people in employment fell by 67,000, driven by lower numbers of people in part-time work [3].

[1] Szu Ping Chan, “UK wage growth soars but unemployment rises for first time in two years”, www.telegraph.co.uk
[2] Katie Allen, “Figures expected to show wage growth at 5 year high”, www.guardian.com
[3] William Schomberg and Andy Bruce, “UK unemployment rate rises for first time in over two years, earnings growth faster”, www.reuters.com