Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

Record wage growth could see another interest rate rise from Bank of England

by July 11, 2023
July 11, 2023
Record wage growth could see another interest rate rise from Bank of England

It seems strange to cheer what economists call a “loosening in the labour market”.

What that basically means is: employment growth is slowing, joblessness is on the up, vacancies falling and wage growth receding.

It seems strange to cheer what economists call a “loosening in the labour market”.

In a shock to the City, the unemployment rate in the three months to May climbed to four per cent from 3.8 per cent in the previous three months.

Employment volumes grew a shade over 100k over the same period, a slow down from the 250k additional people who found a job in the preceding quarter.

Vacancies whittled down 85k, but are still over 1m, historically very high.

Among the strangest things in this latest labour force snapshot was that wages are still growing at a record pace of 7.3 per cent. The ONS upgraded its earlier estimate for pay growth in the previous months to that rate.

This shouldn’t be the case. An increase in the number of people available for a job should take some bargaining power away from workers by increasing competition between them.

Economic inactivity fell 141k, meaning there should be about 40k more Brits looking for a new gig.

There were fewer vacancies for every unemployed person in the UK, with the ratio falling to 0.77. At its peak, the gauge was over 1, illustrating how strong demand for labour has been coming out of the pandemic.

“While this ratio remains low by historical standards, this quarterly increase suggests a slight easing of recent tightness in the labour market,” the ONS said in its release.

So it is peculiar that pay acceleration is beating everyone’s expectations. Perhaps that suggests workers’ mindsets have shifted toward expecting higher inflation in the future, compelling them to demand bumper settlements. But data from the Bank of England suggests this isn’t the case.

What is even more striking is that record pay growth is still being outstripped by rising prices. When accounting for the consumer price index, the UK’s official inflation measure, real wages fell 1.7 per cent over the last three months.

That trend has been playing out in the economy for more than a year and a half now.

Workers should get set for yet more pain to come.

Unfortunately, 7.3 per cent wage growth is just way too high for the Bank of England. In its latest policy statement, it said it would only stop increasing interest rates if pay and services inflation ebbed.

The former of those two variables most certainly is not.

We may be in store for a repeat of last month’s 50 basis point rate increase on 3 August.

Whether the Bank sends rates to a peak of 6.5 per cent, as financial markets expect, will wholly depends on getting pay growth and services inflation back down – fast.

Read more:
Record wage growth could see another interest rate rise from Bank of England

0
FacebookTwitterGoogle +Pinterest
previous post
Digitisation of trade docs would save firms £1.1bn and put UK ‘ahead of G7 and most the world’
next post
EU to drop ban of hazardous chemicals after industry pressure

You may also like

New HMRC data raises UK hopes of end...

December 5, 2022

H.I.G. Capital Exits Promotional Products And Healthcare Assets...

April 23, 2025

Rail unions considering ‘updated’ offer from train firms...

April 14, 2023

Horse Racing and Care – How Big Is...

October 21, 2024

Revolutionizing E-commerce: The Crucial Role of Order Management...

December 13, 2023

Dragons’ Den star told to pull down antivax...

April 17, 2023

London SMEs committing over half of annual revenue...

August 22, 2023

UK Amazon warehouse workers are balloted for strike...

September 15, 2022

How Digital Entertainment is Reshaping Business and Leisure

March 27, 2025

Wrightbus secures £50 million UKEF financing to turbocharge...

June 9, 2023

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • SCOOP: House Republican eyes bid for Thom Tillis Senate seat after Trump attack

      June 29, 2025
    • Dem delay tactic ends, debate begins on Trump’s ‘big, beautiful bill’

      June 29, 2025
    • GOP, Dem senators remain divided over Medicaid after Trump’s ‘big, beautiful bill’ vote

      June 29, 2025
    • The five liberal courts that tied Trump’s hands before SCOTUS clipped their power

      June 29, 2025
    • Thom Tillis announces retirement from Senate after clash with Trump

      June 29, 2025
    • Revealed: The extensive perks UN officials receive amid budget crisis

      June 29, 2025

    Categories

    • Business (8,334)
    • Investing (2,081)
    • Politics (15,863)
    • Stocks (3,177)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved