British wages grew at their fastest rate in more than six years in the three months to July, adding to signs that a first interest rate hike by the Bank of England is approaching.
Growth in average weekly earnings, not including bonuses, rose by 2.9 percent in the May-July period, the fastest since the three months to February 2009.
It was only slightly faster than wage growth in the three months to June. But in the month of July alone, wages in the private sector, which are monitored closely by the BoE, grew at their quickest pace since June 2008.
Sterling rose and government bond prices fell as investors took the data as a sign that the BoE remained on course to raise borrowing costs next year, despite concerns about the impact of a slowdown in China and some recent weaker readings of Britain’s economy.
Britain’s economy has grown strongly over the past two years but the BoE is watching for signs of a further pickup in pay before it starts raising rates for the first time since the financial crisis.
The Office for National Statistics said the unemployment rate held steady from the February-April period at 5.5 percent, matching a record low since before the financial crisis. It was lower than the 5.6 percent rate in the three months to June.
Despite a small rise in the number of unemployed people, the numbers suggested Britain’s labour market had stabilised after weakening in recent months.
Wages have picked up faster than the BoE expected earlier this year but a long-awaited improvement in productivity could take some of the inflationary heat out of higher pay.