Although the latest set of employment statistics once again shows that the UK labour market remains in a relatively robust state of health, the data did suggest that the recent growth in wages may have stalled.
According to data from the Labour Force Survey, the unemployment rate fell to 3.8% in the January to March period. This was the lowest reported figure since the three months from November 1974 to January 1975.
However, despite this drop in the unemployment rate, the data also revealed a slowdown in wage growth. Indeed, average weekly earnings including bonuses were reported to have risen by an annual rate of 3.2% in the three months to March, down from 3.5% in the previous three-month period. In real terms, total pay increased by 1.3% in the three months to March, down from 1.6% in the December to February period.
Furthermore, a recent industry survey has revealed that there is currently little upward pressure on wage growth. XpertHR, an organisation which specialises in analysing pay settlements, found that the median pay deal offered by major UK companies in the three months to April was 2.5%, around the same level that was reported earlier in 2019.
Commenting on the latest data, XpertHR analyst Sheila Attwood said: “Many of the current pay awards are lower than employees received in 2018, suggesting that there is little scope for higher rises this year.”
Last month the BoE said that it expects wage growth to ease back to 3% by the end of this year. While the latest official statistics do show that wages are still currently rising at a rate above this forecast level, the data also suggests that wage growth pressures may have started to ease.