UK pay rose by an annual 6.4% in the three-month period of September to November, marking the largest pay increase since records began in 2001 excluding the COVID-19 period when figures were distorted by government support. This exceeds the forecasts of economists polled by Reuters, who expected growth of 6.2% or 6.3%.
The UK’s jobless rate is hovering at 3.7%; nearing its lowest figure over the past 50 years. With an increase of 27,000 jobs for the period, Bank of England Governor Andrew Bailey acknowledged that there is currently a shortage of workers in the UK labor market.
While a positive employment outlook, the rise in employment and pay rate does threaten to stand in the way of the ongoing inflation cooldown, Bailey warned. As a result, the Bank of England may be compelled to tighten its interest rate policy in response.
Currently, analysts expect the BoE to implement a half percentage point rise in Bank Rate to 4.0% on February 2. There is currently only a one in four chance that the central bank will limit its increase to 25 basis points.
Private sector pay for the period increased by 7.1% while public sector pay rose by 3.3%.
