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Case for rate cut strengthens with latest pay and jobs data

by: Paloma Kubiak
  • 21/01/2020
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The employment rate has reached a new high but wage growth slowed in the three months to November 2019, official statistics reveal.


The Office for National Statistics (ONS) data shows that average pay is still below its pre-crisis high almost 12 years on.

For November 2019, average regular pay, before tax and other deductions, was an estimated £511 per week in nominal terms.

The figure in real terms is £472 per week, which is still £1 (0.2 per cent) lower than the pre-economic downturn peak of £473 per week in March 2008.

Pay rises excluding bonuses slowed to 3.4 per cent from 3.5 per cent, while it was unchanged at 3.2 per cent when including bonuses.

The ONS said the annual growth in total pay was weakened by unusually high bonus payments made in October 2018 compared with typical bonus payments recorded last year.

In real terms after adjusting for inflation, annual growth in total pay is estimated to be 1.6% and annual growth in regular pay is estimated to be 1.8%.

The ONS said the employment rate reached a record high of 76.3 per cent, with 32.9 million people aged 16 and over in work. This is 359,000 more than a year earlier.

An estimated 1.31 million people were unemployed during September and November 2019, 64,000 fewer than a year earlier and 618,000 fewer than five years ago.

The unemployment rate was 3.8 per cent, largely unchanged on the previous quarter.


Rate cut more likely

Ed Monk, associate director for personal investing at Fidelity International, said the data, viewed alongside lower inflation confirmed last week, strengthened the case for the Bank of England to cut interest rates.

He added: “The good news is that households, in aggregate, are getting richer as wages rises faster than prices.

“That’s some comfort when there are other warning lights for the economy. Weak overall growth and retail sales suggest the economy is stalling.”

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Another month, another record for employment, and another rise in wages.

“At first glance it looks like the good times continue to roll, but when it comes to pay, we’re still making up the ground we lost during the financial crash. After you take inflation into account, average pay is still lower than it was in March 2008.”

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