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UK wage growth has slowed, as the jobs market continues to cool, but continues to outpace inflation.
Average earnings (excluding bonuses) grew by 6.2% per year in the October-December quarter, new data from the Office for National Statistics this morning shows, down from 6.7% the month earlier.
Total pay growth (including bonuses), slowed to 5.8% from 6.7%.
Both readings are higher than the City expected.
Much, but not all, of this wage growth is being eaten up by inflation, which ended 2023 at 4%.
If you strip out CPI inflation, then real total earnings rose by 1.6%, and regular pay grew by 1.9% – growth was last higher in July to September 2021.
That should help workers through the cost-of-living squeeze, but may disappoint the Bank of England which is looking for signs that inflationary pressures are easing.
Today’s jobs report also shows that the number of payrolled employees in the UK rose by 31,000 between November and December 2023, and rose by 401,000 over the year.
The unemployment rate has dropped to 3.8%, a rate last seen a year earlier in October to December 2022.
The employment rate rose to 75.0%, but the ONS warns that employment growth has slowed.
And the economic inactivity rate remains worryingly high at 21.9%, having been driven up last year by a rise in long-term sickness.
ONS director of economic statistics Liz McKeown says:
“It is clear that growth in employment has slowed over the past year. Over the same period the proportion of people neither working nor looking for work has risen, with historically high numbers of people saying they are long-term sick.
“Job vacancies fell again, for the nineteenth consecutive month. However, there are signs this trend may now be slowing.
“The number of days lost to strikes went up in December, with the majority coming from the health sector.
“In cash terms earnings are growing more slowly than in recent months, but in real terms they remain positive, thanks to falling inflation.”
7am GMT: UK labour market report
10am GMT: ZEW index of eurozone economic sentiment index
1.30pm GMT: US inflation report for January