UK average regular earnings growth remained at 5.9% in the three months to January and was 3.2% higher after taking Consumer Prices Index inflation into account, the Office for National Statistics has said.
Meanwhile, the UK unemployment rate remained unchanged at 4.4% in the three months to January.
Policymakers closely watch the jobs market, particularly wages, because they are key indicators of inflationary pressure in the economy.
Suren Thiru, ICAEW economics director, said: “These figures suggest that the UK’s jobs market had little momentum even before next month’s twin hit of rising National Insurance and National Living Wage costs, as free-falling business confidence continues to curtail recruitment activity. »
However, he noted: “Elevated wage growth is a double-edged sword for the economy because, while it’ll help boost consumer spending – a key driver of economic growth – it may limit the pace of interest rate cuts by fuelling fears over rising inflation.
“The UK’s labour market may soon slide into choppier waters as April’s sizable surge in business costs, and a flagging economy could well trigger both moderately higher unemployment and weaker pay settlements.
“While an interest rate hold at lunchtime today looks inevitable, the vote split and tone of the meeting minutes could well offer hope of another policy loosening sooner rather than later, probably in May.”
