UK Employment Positive But Wages Lag Inflation

Employment rose by a record 345,000 in the three months to April but Britain’s workers were squeezed by a dramatic slowdown in pay growth, official figures showed.

The number of people in work stood at 30.54 million, according to the Office for National Statistics (ONS), after a rise which was the highest since records began in 1971.

It means 780,000 jobs have been added in the past 12 months, the biggest annual rise since 1989.

But pay growth for the period slowed to 0.7%, a sharp fall on last month’s figure of 1.7%, blunting hopes of a return to a period of real-terms pay growth.

The increase was well below the latest inflation rate of 1.8%, meaning the cost of living is still going up more quickly than wages.

This slowdown in total pay was largely accounted for by bonuses, which fell sharply compared with a period last year when in many were deferred to April after tax changes were introduced.

But regular pay growth also slowed, to 0.9% from 1.3%.

Unemployment fell by 161,000 to 2.16 million, with the jobless rate dropping to 6.6%.

Pay growth briefly edged higher than inflation in the spring, marking a break from years of falling real wages and providing a boost to the Conservatives as they seek to take the squeeze on household budgets off the pre-election agenda.

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza