Pace of UK wage growth still high

Wage growth for UK employees remains high in the latest data, despite a rise in unemployment.

Between January and March 2024, regular pay (excluding bonuses) grew by 6% compared with the same period last year, the Office for National Statistics (ONS) said. Total pay (including bonuses) was up 5.7%.

Economists had expected pay growth to slow down, but both measures were unchanged from the previous monthly report.

Meanwhile, the unemployment rate was estimated at 4.3% — up on the quarter and on the year, and above pre-pandemic rates.

The data also showed a further drop in the estimated number of job vacancies, down 26,000 on the quarter to 898,000 in February to April 2024. This was the 22nd consecutive month of declining vacancies, although the number remains above pre-pandemic levels.

“We continue to see tentative signs that the jobs market is cooling,” said Liz McKeown, director of economic statistics at the ONS.

With unemployment increasing, the number of unemployed people per vacancy has continued to rise, approaching levels seen before COVID-19, McKeown noted.

“Earnings growth in cash terms remains high, with the recent falls in the rate now levelling off while, with inflation falling, real pay growth remains at its highest level in well over two years.”

The earnings data will be taken into account by policy makers at the Bank of England who will decide if and when interest rates should be cut.