UK Wage Growth Falls to Three-Month Low, Jobless Rate Steady

British wage growth fell by more than expected to hit its lowest in three months in June, official data showed on Wednesday, while the unemployment rate held steady over the same period.

Growth in average weekly earnings in the three months to June slumped to 2.4 percent on the year, slowing down from 3.2 percent in the three months to May, well below economists’ forecasts of 2.8 percent in a Reuters poll.

The Office for National Statistics also said Britain’s unemployment rate held steady at 5.6 percent after an unexpected rise in the three months to May.

May’s increase in unemployment was the first since early 2013 and left economists unsure whether Britain’s recovery was weakening, or if this was a brief hiccup as employers hunted for better-qualified staff.

The Bank of England is closely eyeing Britain’s labor market as it judges when to raise interest rates for the first time since the start of the financial crisis in 2008.

Wages have picked up faster than the BoE expected earlier this year, but last week the BoE said this was partly mitigated by stronger productivity and the fact that wage rises were driven by higher bonuses, something which could prove temporary.

Markets pushed back expectations for an interest rate rise in Britain last week after only one Bank of England official voted for a rise in borrowing costs against expectations that two or more would do so.

The number of people in employment fell on the quarter to 31.035 million in the second quarter of 2015, down 63,000 from the calendar quarter record in the first three months of 2015.

Excluding bonuses, average weekly earnings growth held steady at 2.8 percent in the three months to June as expected. This rate was last higher in early 2009.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam