UK wage growth rises to 5.2%

Stay informed about free updates

Just register to go UK job myFT Digest — delivered straight to your inbox.

UK wages growth rose more than forecast in the three months to October, underpinning expectations that the Bank of England will hold off on interest rate cuts this week.

Weekly pay growth, excluding bonuses, rose to 5.2 per cent from 4.9 per cent in the three months to September, Office for National Statistics said Tuesday. This figure was higher than the 5 percent expected by economists.

The acceleration was driven by a 5.4 percent increase in the private sector, above the level that the BoE believes is consistent with meeting its 2 percent target.

Yael Selfin, chief economist at KPMG, said the figures would “close the door” on any chance of the Monetary Policy Committee lowering borrowing costs to 4.75 percent when it announced the latest decision on Thursday.

After the data, traders reduced their bets on a discount this week to 10 percent, according to the conditions specified in the swaps market.

Sterling was little changed at $1.27 in early trade.

Thomas Pugh, economist at think tank RSM UK, said the figures were a “nail” on the prospect of an interest rate cut this week.

Meanwhile, hiring continued to decline during that period, while the number of vacancies decreased.

The number of paid workers increased by just 0.1 per cent between September and October, ONS data showed, leaving the total number of paid workers in the three months to October down 0.1 per cent.

The ONS said the unemployment rate was unchanged at 4.3 per cent in the three months to October, with employment steady at 74.9 per cent, but these measures have been unreliable in the past year because of the problems with the research that supports them.

A separate quarterly survey of employers, published as part of Tuesday’s data release, showed that the number of workers was 36.8 million in September 2024, an increase of 73,000 from June 2024.

Earlier data for November suggested that employers cut staff after the Budget, but these figures are due for revision.

The BoE is grappling with persistent wage pressures even as the economy slows. The economy unexpectedly shrank by 0.1 percent in October, the second contraction in a row, as a result of the Labor government’s ambitions to boost growth.