Official figures show wages in the UK have grown at a faster rate than expected. At the same time, the jobless rate increased to 4.3% between January and March, the highest since May to July last year.
Annual pay growth excluding bonuses averaged 6% between January and March, unchanged from last month according to figures from the Office for National Statistics (ONS). It had been expected to slow to 5.9% between January and March.
Taking inflation – which measures the pace of price rises – into account, wages were up by 2.4%.
Unemployment, meanwhile rose to 4.3% between January and March, the highest for almost a year, the ONS said. The number of vacancies also slowed meaning more unemployed people are competing for the same jobs.
Liz McKeown, the ONS’s director of economic statistics, said: “We continue to see tentative signs that the jobs market is cooling, with both employment from our household survey and the number of workers on payroll showing falls in the latest periods.
“At the same time, the steady decline in the number of job vacancies has continued for a 22nd consecutive month, although numbers remain above pre-pandemic levels.”
The wage figures will be closely watched by the Bank of England as it considers if and when interest rates can be cut.
Speaking after the latest statistics were published at a conference organised by the Institute of Chartered Accountants in England and Wales, Huw Pill, the Bank of England’s chief economist said: “It’s clear that the job is not yet done – some restriction is still required, and the timing and extent of any cuts in bank rate will only be able to assessed when we have more evidence.”
Ashley Webb, economist at the consultancy Capital Economics told the Financial Times that the new data could, “at the margin … make the bank a bit more uneasy about first cutting interest rates in June”.
The next rate-setting meeting is in June and there are a number of key economic releases before then which the Bank will use to make its decision.
At its most recent meeting, Bank governor Andrew Bailey said he was “optimistic that things are moving in the right direction”, although, he added, a fall in borrowing costs was “not a fait accompli”.
Rates have been 5.25% since last August, the highest level in 16 years.
