Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
UK wage growth remained strong in the three months to May as the jobs market steadied, reinforcing doubts over the pace at which the Bank of England will cut interest rates.
The Office for National Statistics said annual growth in average weekly earnings, including bonuses, slowed to 5.7 per cent, down from 5.9 per cent in the three months to April.
Excluding bonuses, annual wage growth also slowed to 5.7 per cent, down from 6 per cent in the three months to April and in line with analysts’ expectations.
The pace of pay growth — still buoyed by a bumper rise in the minimum wage — remains stronger than the Bank of England had expected when it last published forecasts in May.
The figures follow a run of recent data that suggests inflationary pressures in the economy could prove more persistent than the Monetary Policy Committee expected when it last met in June. Then, it held interest rates at 5.25 per cent but said the decision was “finely balanced”, suggesting it was edging closer to the first cut.
But in the past week, official data has revealed a combination of stronger GDP growth, sticky services inflation and ongoing pay pressures that will complicate next month’s interest rate decision, even though headline inflation remained at the BoE’s target of 2 per cent in June.
