UK Wage Growth Weakest In More Than 2 Years

UK wage growth softened to the lowest in more than two years in the three months to August, adding support to expectations that the central bank will cut interest rates further at the next meeting.

In the three months to August, average earnings excluding bonus increased 4.9 percent from the previous year, slower than the 5.1 percent increase in the three months to July, data from the Office for National Statistics showed Tuesday.

This was the slowest rise since June 2022 and also matched expectations.

Including bonus, earnings moved up 3.8 percent annually, as expected, after rising 4.0 percent in the prior period.

The unemployment rate fell slightly to 4.0 percent in three months to August, while it was forecast to remain unchanged at 4.1 percent.

Payroll employment decreased 15,000 from the prior month to 30.3 million in September.

Data showed that vacancies decreased for the 27th consecutive period. In the third quarter, the number of vacancies decreased by 34,000 to 841,000.

There were an estimated 31,000 working days lost due to labor disputes in August.

Another fall in wage growth together with some signs that the labor market continued to loosen gradually, add further support to widespread expectations that the BoE will cut interest rates by 25 basis points to 4.75 percent at the next policy meeting in November, Capital Economics economist Ashley Webb said.

ING economist James Smith said he expects the BoE to cut rates in November and December and at every subsequent meeting until the rate hits 3.25 percent next summer.

The BoE had maintained its benchmark rate at 5.00 percent at the September meeting after lowering it by a quarter-point in August, which was the first reduction since 2020.

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