Wages are growing at a faster pace than anticipated after a slow year, according to data released today (17 December).
Figures from the Office for National Statistics (ONS) showed annual growth in employees’ average earnings was 5.2% in the three months to October 2024.
In the same period, the Labour market overview, UK: December 2024 indicated that the UK employment rate for 16-to 64-year-olds was found to be largely unchanged from last year, at 74.9%, but up from the previous quarter.
The rate of unemployment for those aged 16-plus was projected to be 4.3% in the three months to October, higher than a year ago and an increase from the last quarter.
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Commenting on the figures, ONS director of economic statistics Liz McKeown said: “After slowing steadily for over a year, growth in pay excluding bonuses increased slightly in the latest period, driven by stronger growth in private sector pay. Pay growth including bonuses increased by more, but this reflects previous figures being affected by the one-off payments made to some public sector employees in 2023.”
Estimates for payrolled staff rose by 24,000 (0.1%) between September and October, increasing by 140,000 (0.5%) over the year.
During the quarter, the number of payrolled workers dropped by 22,000 (0.1%), but increased by 160,000 (0.5%) over the year in the three months from August to October.
Mc Keown added: “The number of people on payrolls grew slightly in October, but we have seen annual growth rates continue to slow, showing a consistent trend with our latest jobs data from employers. The number of job vacancies has also fallen again, though the total remains a little above where it was before the pandemic.”
However, she urged caution when interpreting the data due to problems with gathering the figures and while improvements being made to the survey are fully working.
Jack Kennedy, senior economist at global hiring platform Indeed, said: “Stronger-than-expected wage growth underlines the quandary facing Bank of England rate setters. Though the labour market has cooled significantly and heads into 2025 in a fragile state, it continues to generate sticky and elevated wage growth that remains above levels consistent with the Bank’s inflation target.”
He believes that whether the trend continues will be key for the outlook, noting the data quality issues “continue to muddy the waters on underlying dynamics, particularly on the labour supply side”.
The ONS data suggested the number of vacancies fell by 31,000 on the quarter to 818,000 to November 2024. These dropped for the 29th consecutive period, but are still higher than pandemic levels.
Indeed’s figures showed job postings had continued to decline into early December, with a weakening in nearly all occupations over the past year – including low-paid jobs, such as hospitality and retail positions.
Julia Turney, partner and platform and benefits, Barnett Waddingham said: “Economically, a lot has changed since unemployment was last announced, but the latest figures are a sobering reminder that we still have a long way to go.
“Businesses across the country are still largely coming to terms with costly new changes announced in the Autumn Budget – including the rise in national minimum wage and higher employer NICs – which have led many to consider hiring freezes, or potential job cuts; largely putting employers on the backfoot.”
She said that while the government’s Get Britain Working Again whitepaper and £24 million investment to tackle ill health and inactivity offer some hope, ultimately the proof will be in the action that is taken to achieve this.
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