Wage growth excluding bonuses slowed to 6.6 percent in November, down from 7.2 percent in October, new data from the Office for National Statistics shows. An easing of wage growth will boost market confidence in the Bank of England’s looming interest rate cuts.
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‘Employers remain cautious about hiring under uncertain economic conditions’
Alice Haine, personal finance analyst at Bestinvest:
‘The UK labor market continued to show signs of weakening at the end of last year, with the estimated number of employees on payroll falling by 24,000 in December and the number of vacancies falling by 49,000 to 934,000 in the quarter to December – the 18th consecutive period of decline. employers remained cautious about hiring in uncertain economic conditions.
‘The cooling labor market is having an impact on wage growth, with the increase in regular wages, excluding bonuses, declining to 6.6% on an annual basis in the three months to November.
‘Annual growth in average total compensation, including bonuses, also fell to 6.5% over the same period. In real terms, real salaries rose by 1.4% and total wages by 1.3% when inflation is included – meaning incomes are growing faster than price increases and are stretching further than a year ago.
‘The hope is that real wage growth will remain positive in 2024, as inflation is expected to decline further as the year progresses.
While some forecasters expect inflation to fall rapidly in the first quarter on the back of lower energy prices, this optimism may be tempered by rising tensions in the Red Sea and broader Middle East – a reminder that global price pressures remain is strongly present with us and the risk of change is always a factor.’
Higher interest rates for a longer period of time could lead to more job losses
Richard Carter, head of fixed income research at Quilter Cheviot:
‘The external market is looking for signals that the labor market is loosening as this will show that monetary policy is working and that inflation will continue to decline and stabilize.
“However, if you keep interest rates too high for too long, the Bank could overshoot its target and cause more pain than necessary in the labor market.
‘So far, however, the estimated number of vacancies in Britain in the period October to December 2023 has fallen by 49,000 this quarter to 934,000.
The estimate of the number of employed people in the UK for December 2023 fell by 24,000 from the revised November 2023 figure to 30.2 million.
‘This may be due to a change in data collection methods, but while there is now certainly more optimism in the air regarding Britain’s economic future, businesses are still being hit by the cost of living storm .
‘These interest rates could well rise if the Bank indeed keeps interest rates high for longer.’
Wage growth slows to 6.6%
Wage growth excluding bonuses slowed to 6.6 percent in November, down from 7.2 percent in October, new data from the Office for National Statistics shows.
An easing of wage growth will boost market confidence in the Bank of England’s looming interest rate cuts.
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