By William Schomberg and Sachin Ravikumar
LONDON (RockedBuzz via Reuters) – Wage growth in Britain – which the Bank of England is closely monitoring as it considers suspending a series of interest rate hikes next week – lost pace in the three months to January, according to Official data showed on Tuesday.
Base pay, excluding bonuses, increased 6.5% from 6.7% in the three months to December, representing the first slowdown in that measure since the end of 2021.
Total pay grew a 5.7% a year in the November-January period, slowing from 6.0% in previous figures and the weakest increase since the three months to July last year, the Statistics Office said. national.
Economists polled by RockedBuzz via Reuters had expected core and total earnings to rise 6.6% and 5.7%, respectively.
Britain’s unemployment rate held at 3.7% in the three months to January, close to its lowest in nearly five decades, the data also showed.
Economists polled by RockedBuzz via Reuters mostly expected the rate to rise to 3.8%.
Chart: Unemployment rate unchanged – https://www.ceiving.com/graphics/BRITAIN-ECONOMY/UNEMPLOYMENT/lgpdkorgqvo/chart.png
The BoE is expected to raise borrowing costs on March 23 by a further quarter of a percentage point to 4.25%, although investors sharply reduced their bets on such a move after the collapse of US bank Silicon Valley Bank.
Interest rate futures showed that investors were placing the possibility that the BoE would halt its rate hikes next week at around 40% by 08:30 GMT, while a quarter-percent increase in interest rate hikes loan was seen as a 60% chance.
Yael Selfin, chief economist at KPMG UK, said while ONS data showed a slowdown in wage growth, the most recent measures showed little change recently.
“Combined with stronger-than-expected GDP data, this should provide enough evidence for the Bank to lift rates when it meets next week,” Selfin said.
But Martin Beck, with the EY ITEM Club forecasters, said a break in BoE rates is now likely after 10 consecutive hikes.
“These moves follow other developments, including an unexpectedly significant drop in services sector inflation in January,” Beck said.
The pound rose against the dollar and the euro shortly after the data before falling back.
Finance Minister Jeremy Hunt is expected to announce measures in his budget statement on Wednesday that will seek to get more people into work, easing inflationary pressure in the labor market.
“The labor market remains strong, but inflation remains too high,” Finance Minister Jeremy Hunt said after the release of the data, a day before his budget speech.
“Tomorrow at the budget, I will outline how we will go further to reduce inflation, reduce debt and grow the economy, including helping more people get back to work.”
Data on Tuesday showed earnings were further reduced by an inflation rate that hovered above 10% in January.
The ONS said basic wages, when adjusted for inflation using the consumer price index, fell by 3.5%, one of the biggest drops since records began in 2001. Total wages fell by 4.4% in real terms, the largest drop since the beginning of 2009.
Chart: Additional Real Payroll- https://www.ceiving.com/graphics/BRITAIN-ECONOMY/UNEMPLOYMENT/zjvqjyxmzpx/chart.png
Some signs of further easing of tension in the labor market were recorded with the economic inactivity rate – which measures people without work and not looking for work – which fell by 0.2 percentage points to 21.3%, mainly driven by young.
Job vacancies fell for the eighth consecutive time in the three months to February, dropping by 51,000 from the previous three months to 1.124 million.
(Art by Sumanta Sen; Editing by Kate Holton and Christina Fincher)