UK wage growth still growing, but slower…

UK nominal wage growth has continued to slow down for the three months to January, according to the most recent Office for National Statistics (ONS) update. The data supports the Bank of England’s position that inflation tension is easing.

Nominal wages are defined as the literal amount of money you get paid per hour or by salary, unadjusted for any factors.

Average earnings, including bonuses, were 5.6% over the period than a year earlier — down from 5.8% in the three months to December. Excluding bonuses (shown below), annual growth slowed from 6.2% to 6.1%.

Inflation adjusted figures remained at 1.8% in January compared to the previous month.

Aligned with the headline wage growth slowing down, the UK job vacancies are dropping consistency, dipping to around 934,000 at the end of 2023 well under Covid-19 level highs.

However, employment levels in the UK remain strong so it’s not clear how much lower vacancies are presently influencing wage growth.

The Bank of England will want to see more evidence of pay really slowing down before cutting rates, market analysts seem to agree.

For those who want to see lower interest rates in the UK, there is good news on the horizon. A recent survey of Chief Financial Officers (CFOs), conducted by the central bank, shows that “wage growth expectations have finally dipped below 5%, having been stuck there or thereabouts for the best part of a year.”

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