Official data revealed that the growth in regular pay for British workers, which the Bank of England is constantly monitoring, slowed from a previous record high and that job openings decreased, indicating that the labor market is losing steam.
In the three months ending in August, British average wages, excluding bonuses, were 7.8% higher than a year earlier, down from the upwardly revised 7.9% in the three months ending in July, the first decline since January.
The Bank of England keeps an eye on average earnings as it decides whether to resume raising interest rates to combat the dangers from the still quite high inflation. Although the most recent reading aligned with forecasts, sterling’s value versus the US dollar decreased after the data.
Total pay, a more erratic metric that considers one-time incentives, increased 8.1% in the three months leading up to August from the same period last year.
However, the real-term pay rise was much smaller due to consumer price inflation in August, which was 6.7%. In the three months leading to August, regular salary increased annually by 0.7% after accounting for CPI inflation.
Huw Pill, the chief economist at the Bank of England, stated on Monday that the rapid nominal wage rise contrasted with most other labor market indicators, indicating a weakening economy. The number of open positions fell from 998,000 in the three months before August to 988,000 in the three months after September.
According to preliminary employer payroll figures, there were 11,000 fewer persons working in September than there were in August.
The ONS announced on Friday that it required extra time to consider the low response rates and that unemployment numbers and other pertinent labor market data would not be released until October 24.
Although a complete picture won’t be seen until the delayed ONS data is released next week, Ashley Webb, an economist at consultancy Capital Economics, said a 15th straight decline in job openings suggested the tightness of the labor market had relaxed a little more.
“In any case, wage growth has peaked. But from here, we think it will only decrease gradually,” Webb added.
