Home Business NewsBusiness Pay growth closes in on inflation but unemployment ticks up

Pay growth closes in on inflation but unemployment ticks up

by LLB Editor
15th Aug 23 10:32 am

Annual growth in regular pay 7.8% in the three months to June, figures out today showed.

The number of long-term sick hit another record high and unemployment rose by more than expected to 4.2%.

Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK jobs figures: “Workers will be delighted by the latest jobs data which shows that wages are finally at a tipping point. After months and months of agonising as swelling pay packets simply couldn’t keep up with scorching price rises, the gap between the two has almost vanished.

“For those in the private sector the switch has already been flicked, easing the pressure on households and on employers desperate to keep hold of skilled staff.

“And there’s every indication that prices have continued to cool. With new data due out tomorrow we should get a real insight into how all our finances are shaping up for the rest of the year.

“The question for the Bank of England is how much pressure will remain on companies to offer inflation busting settlements and how will employees react to their change in fortunes.

“For many households a few extra pennies are unlikely to make a real difference to living standards, especially those with increased mortgage or rental payments.

“Most people have been left badly bruised by the impact of increased costs for life’s necessities like power and food. Even if inflation is falling and wage increases are finally making a material difference, prices are still historically high and in the most part show no signs of falling any time soon.

“And more cracks are appearing in the labour market. Unemployment has ticked up by more than had been anticipated as economic uncertainty impacts growth plans and sounds the death knell for wounded companies like Wilko.

“Vacancy numbers keep falling, and looking at July’s payroll data it does appear that softening in the labour market is cooling wage growth.

“But there seems little doubt that interest rates will have to rise again next month and market expectation for a further quarter percentage point hike in November has shot up off the back of today’s jobs data.

“For the government there are still huge wounds that need tending. The number of people signed off on long term sick leave has hit another record high and the age-old issue of re-skilling those out of work for more than six months is as acute as ever.

“There are jobs to be had that need filling if the pledge to get the economy growing significantly is to be met, but big questions remain about how that can be achieved.”

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