UK private sector wage growth slows to lowest rate in five years

{"text":[[{"start":8,"text":"UK private sector wage growth slowed to its lowest rate in more than five years in the three months to April, reinforcing the case for the Bank of England to leave interest rates on hold at its policy meeting on Thursday."}],[{"start":21,"text":"Annual growth in private sector weekly earnings, excluding bonuses, slowed to 2.9 per cent, down from 3.1 per cent in the three months to March, data from the Office for National Statistics showed."}],[{"start":34.95,"text":"Regular pay growth across the economy as a whole remained steady at 3.4 per cent and was stronger than the 3.2 per cent analysts had expected."}],[{"start":45.75,"text":"The slowdown came against a backdrop of weak hiring, with payroll employment in April down by 0.5 per cent, or 138,000, from a year earlier, although this marked an upward revision from an earlier ONS estimate. Provisional figures for May suggested payroll employment was broadly unchanged from April."}],[{"start":65.9,"text":"Martin Beck, chief economist at WPI Strategy, said revisions to data showed the jobs market was “not in quite as much trouble as previously feared”. But he added that “the direction of travel is still clear: employment is weakening, pay growth is slowing, and the case for a Bank of England rate rise this week looks even thinner”."}],[{"start":87.10000000000001,"text":"Louise Murphy, senior economist at the Resolution Foundation think-tank, said the figures showed wages for private-sector workers had now been falling in real terms since last October, with the squeeze set to continue over the summer."}],[{"start":100.05000000000001,"text":"Weakness in the labour market was “showing up through rising irregular work in the form of self-employment and zero-hours contracts, higher youth unemployment and lower wage growth,” she added."}],[{"start":111.45000000000002,"text":"The jobs data follows figures released on Wednesday that showed UK inflation unexpectedly remained steady at 2.8 per cent in May, despite the sharp rise in global energy costs owing to conflict in the Middle East. "}],[{"start":124.75000000000001,"text":"The data reinforces expectations that the BoE’s Monetary Policy Committee will leave interest rates unchanged at 3.75 per cent this week, even though two of its members have signalled they remain concerned about the lingering effects of the energy shock on broader price pressures."}],[{"start":null,"text":"

"}],[{"start":142.3,"text":"James Smith, economist at ING, said Thursday’s data suggested that companies had “dealt with those cost pressures through weaker hiring” and should “keep the Bank of England on track for a hold today”. He added: “So long as the Iran deal holds, we think rate hikes can be avoided.”"}],[{"start":160.3,"text":"Ashley Webb, at the consultancy Capital Economics, said the inevitable rise in CPI inflation over the coming months, as higher energy prices fed through to consumers, would be “a big test of nerve” for the BoE. Despite signs of stabilisation in the latest figures, “the labour market is still very weak and likely to weaken further”."}],[{"start":180.8,"text":"The ONS official measure of unemployment — based on its labour force survey — showed unemployment at 4.9 per cent in the three months to April, down from 5 per cent in the three months to March. This was due to higher economic inactivity, with the employment rate unchanged. "}],[{"start":197.55,"text":"Liz McKeown, ONS director of economic statistics, said the number of new recruits was at its lowest level in five years. Vacancies also declined to a post-pandemic low of 707,000, a figure that will reinforce fears over the lack of openings for young people seeking their first job."}],[{"start":218.70000000000002,"text":"Pat McFadden, work and pensions secretary, said the government was “pushing ahead with the biggest youth employment reforms in a generation” to create opportunities for young people. "}],[{"start":228.15,"text":"The pound was little changed against the dollar at $1.329. The two-year gilt yield — which is responsive to changes in interest rate expectations — rose 0.05 percentage points to 4.19 per cent. That reversed the 0.05 percentage point fall yesterday on lower-than-expected inflation data. "}],[{"start":247.70000000000002,"text":"Some investors pointed to the higher-than-expected wage growth as indicative of an economy that was doing better than expected. Emma Mogford, fund manager at Premier Miton, said that “could increase the chances of an increase in interest rates later this year”."}],[{"start":263.25,"text":"Additional reporting by Ian Smith in London"}],[{"start":274,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781775201_8841.mp3"}