British wage growth reaches post-financial crisis high

0 Comment(s)Print E-mail Xinhua, October 17, 2018
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LONDON, Oct. 16 (Xinhua) -- Britain's economy faces uncertainty over the coming months about Brexit and how that will affect economic growth, but so far this year wage growth has been strong, recording the best figures since the financial crisis, according to data released on Tuesday.

The pay figures, released by the official data body the Office of National Statistics (ONS), showed average weekly earnings growth moved up 0.1 percentage point to annual rate of 2.7 percent increase over the past three months.

Excluding bonuses, growth was above 3 percent over the same period for the first time since early 2009, when the British and global economies were still being battered by the financial crisis.

Over the past three months wages rose 3.9 percent on the previous rolling three month period, indicating that tightness in the labor market is accelerating the rate of wages growth, despite economic uncertainties around Brexit.

Labor market figures were also released on Tuesday by ONS.

The British unemployment rate remains at 4.0 percent, the lowest level since the mid 1970s, and a low level among peer developed nations such as France where the rate is 9.1 percent.

However, the growth in the number of jobs, which has been a feature of the figures in the past year, was halted in August with a net loss of 5,000 jobs over three months compared with the previous three-month period. This is the first negative reading since October last year.

Thomas Pugh, UK economist with Capital Economics, a London-based financial data analysis firm, said the drop in employment in the three months to August "is more likely to be a blip rather than the beginning of a sustained decline in jobs growth."

Pugh added: "The figures showed a 5,000 fall in employment in the three months to August, in contrast to the consensus expectation of an 11,000 rise, and while unemployment fell by 47,000, this was only thanks to an increase in the number of people leaving the workforce."

The strengthening of pay growth pointed the way towards firmer GDP growth in 2019 as employers would continue to look for workers in a small pool of unemployed people.

Consumer price inflation (CPI) is currently 2.7 percent, and pay growth is ahead of that figure, giving consumers and households more money to spend, which will also help boost economic growth.

Pugh said: "Pay growth continued to accelerate, with underlying pay growth reaching its highest pace since the start of 2009 and the increase in wage growth supports the view that real wage growth is set to accelerate over the next year, which should lift consumer spending and feed into a pick-up in GDP growth in 2019." Enditem

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