UK wages grow at fastest rate for nearly a decade
By Abigail Townsend
Date: Tuesday 13 Nov 2018
(Sharecast News) - UK wages grew at their fastest rate since 2008, according to official data published on Tuesday, although the unemployment rate also showed a surprise increase.
The Office for National Statistics said 32.41m people were employed in the UK in the three months to 30 September, a rate of 75.5% and a marginal increase of 23,000 on the previous quarter.
The number of people out of work also rose, by 21,000 to 1.38m. The unexpected increase was the first after two quarters of failing unemployment, although the figure remains near a historic low.
Wage inflation was 3.2%, or 3% including bonuses, the highest growth since the three months to December 2008 and slightly ahead on the second quarter of 2018. The improvement means that wage growth now stands above inflation.
Laura Suter, personal finance analyst at AJ Bell, said: "The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut.
"However, the current low unemployment, which stands at 4.1%, appears to have shifted the odds back into workers' favour and we're starting to see wages rise more meaningfully."
But ONS senior statistician Matt Hughes sounded a note of caution: "With faster wage growth and more subdued inflation, real earnings have picked up noticeably in the last few months.
"However, real wage growth is below the level seen in 2015, and real wages have not yet returned to their 2008 levels."
Adjusted for inflation, average weekly earnings increased by 0.9% excluding bonuses.
The figures will give the UK's beleaguered retail sector cause for hope. Retailers have seen sales fall away in the autumn and there are concerns they will not pick up over the crucial festive period as consumers worry about household finances, the wider economy and Brexit.
However, Suter warned: "While we might see some spending, it's unlikely that we're going to see a rush to splurge this spare cash. The reality for many is that any increase in take-home pay is likely to be funnelled into paying down the large sums of debt many households have taken on in the past few years."
Balraj Sroya, sales trader at Foenix Partners, said that even with the surprise rise in unemployment, the data shone "a prosperous light" on the UK economy and that gradual increases in interest rates were "on the horizon" for 2019.
But he warned: "However, a no-deal Brexit scenario will likely have a drastic impact on economic indicators and derail the Bank of England's policy implementation."
More UK nationals were unemployed than EU nationals during the quarter. The ONS said the unemployment rate of British nationals was higher, at 4.2%, than that of citizens from other European Union countries living in the UK, at 3.5%.
Noted Hughes: "The recent uptick in British nationals in work and the decline in workers from the so-called A8 eastern European counties both seem to be accelerating."
Countries in the A8 bloc including Poland, Lithuania and Estonia.
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