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UK wage growth accelerated more than forecast in the three months to October, cementing expectations that the Bank of England will hold off cutting interest rates this week.
Growth in average weekly earnings, excluding bonuses, rose to 5.2 per cent from 4.9 per cent in the three months to September, the Office for National Statistics said on Tuesday. The figure was higher than the 5 per cent expected by economists.
The acceleration was driven by a 5.4 per cent increase in the private sector, above the level the BoE believes is compatible with meeting its 2 per cent target inflation target.
Yael Selfin, chief economist at KPMG, said the figures would “close the door” on any chance of the Monetary Policy Committee lowering borrowing costs from 4.75 per cent when it announces it latest decision on Thursday.
Following the data, traders cut their bets on a quarter-point reduction this week to about 10 per cent, according to levels implied in swaps markets.
Sterling was little changed at $1.27 in early trading.
Thomas Pugh, an economist at the audit firm RSM UK, said the figures were “a nail in the coffin” on the prospect of an interest rate cut this week.
Meanwhile, hiring continued to slow in the period, with the number of vacancies declining.
The number of payrolled employees grew by just 0.1 per cent between September and October, the ONS data showed, leaving the overall number of payrolled employees in the three months to October down 0.1 per cent.
The ONS said the unemployment rate was unchanged at 4.3 per cent in the three months to October, with employment steady at 74.9 per cent, but these measures have been unreliable over the past year because of problems with the survey underpinning them.
A separate quarterly survey of employers, published as part of Tuesday’s data release, showed that the number of workforce jobs was 36.8mn in September 2024, an increase of 73,000 from June 2024.
Early data for November suggested employers had cut staffing following the Budget, but these figures are subject to revision.
The BoE is contending with persistent wage pressures even as the economy slows. The economy unexpectedly shrank 0.1 per cent in October, the second consecutive contraction, in a blow to the Labour government’s ambitions to boost growth.