Wage Growth beats Expectations in UK

Average weekly wages, excluding bonuses, rose by 2.7% in the three months through to April, compared with growth of 2.3% in the three month period to March, reports ft.com.

The increase exceeded economists’ expectations, who had forecast an increase of 2.5%. This latest rise marks the fastest wage growth since February 2009.

Including bonuses, average weekly earnings also rose by 2.7%, a further improvement on the 2.3% growth during the three months to March and better than the 2.1% rise anticipated by economists. This was the strongest pace recorded since August 2011.

The UK’s unemployment rate remained stable at 5.5% for April, the lowest unemployment rate since June 2008.

Real incomes in the UK have been boosted this year by low inflation – Britain even experienced deflation in April, although that spell of falling prices lasted only a month.

John Hawksworth, PwC chief macro-economist, said: “This indicates that the tightening of the labour market over the past three years is finally feeding through in a significant way to earnings. It should help to sustain the domestic recovery at a time when the global data remains mixed and storm clouds are gathering over Greece.”

“Jobs growth remains strong and unemployment has continued to fall, although at a slower rate than before as spare capacity is used up in the labour market. With earnings growth picking up ahead of productivity, this is something the Monetary Policy Committee will want to keep a careful eye on over the coming months as it could be a sign of stronger domestic inflationary pressures building up in the medium term,” Mr Hawksworth concluded.