UK Pay growth picked up faster than expected to a rate that has not been exceeded in three years, as businesses found it harder to recruit staff, official figures showed this morning.
Average weekly earnings excluding bonuses rose by 2.9 percent on the year in the three months to July, the fastest since March and gathering speed from the previous three-month period when they grew by 2.7 percent, the Office for National Statistics said.
Including bonuses, total pay growth picked up to 2.6 percent from 2.4 percent.
Economists polled forecast wage growth of 2.8 percent excluding bonuses and 2.4 percent including them. Pay growth excluding bonuses was last higher than 2.9 percent in the three months to July 2015.
The Bank of England keeps a close eye on wage growth for signs of inflation pressure, and last week Governor Mark Carney told legislators that nominal pay growth – excluding volatile bonuses – had slowly risen since 2015 without much accompanying improvement in productivity growth.
The jobless rate held steady at 4.0 percent, its joint-lowest since 1975, as forecast.
A cautious comment by the EU Brexit negotiator that there could be a deal by November if unrealistic demands are taken off the table boosted sterling yesterday afternoon amid new optimism among investors.