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Pay growth tumbles from record high as clouds gather over jobs market

  • Regular earnings growth eased back to 7.3% in three months to October
  • Official data also shows vacancies fell for 17th month in a row
  • Bank of England is expected to peg interest rates at 5.25%

Time 8:43 am, December 13, 2023

Growth in pay has slowed at the quickest pace for two years as the UK jobs market shows more signs of weakening.

That’s according to the Office for National Statistics, which said private sector regular earnings, excluding bonuses, rose by 7.3% in the three months to October, down from 7.8% during the previous three months.

Pay growth is now steadily falling, having hit a record high of 7.9% in the summer.

But the ONS said it was still increasing in real terms because of steep falls in inflation recently.

Earnings growth outstripped inflation at the fastest pace for more than two years – up 1.2% after taking consumer prices index inflation (CPI) into account, according to the latest official figures.

But in further signs that the UK jobs sector is cooling, the ONS said the number of vacancies fell for the 17th month in a row. They were down by 45,000 to 949,000 in the three months to November.

ONS director of economic statistics Darren Morgan said: ‘This is now the longest period of decline on record – longer than in the immediate aftermath of the 2008 downturn.’

But he added that the number of vacancies was still ‘well above its pre-pandemic level’.

Chancellor Jeremy Hunt said it was ‘positive to see inflation continue to fall and real wages growing’.

But the data suggests the jobs market is stalling in the face of a more uncertain economic backdrop, with firms not hiking pay as quickly and fewer vacancies to be filled.

The slowdown in wage growth is seen to be reinforcing the case for the Bank of England to hold off from raising interest rates further.

Policymakers are widely expected to keep rates unchanged at 5.25% when they next decide, which will be tomorrow. Many are forecasting the Bank may look to start cutting rates in 2024.

The ONS data also showed there were 131,000 working days lost through industrial action in October, with 49,000 workers involved in strikes, although this was the lowest number for four months.

According to latest experimental figures, the UK employment level was unchanged at 75.7% in the three months to October.

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