UK regular wage growth cools, in line with BoE's view of economy

People walk over London Bridge looking at a view of Tower Bridge in the City of London financial district in London, Britain, October 25, 2023. REUTERS

British wage growth excluding bonuses fell in the third quarter to its lowest level in over two years, official data showed on Tuesday, something that will give the Bank of England confidence that inflation pressures will continue to ease as it hopes.

British average weekly earnings, excluding bonuses, were 4.8% higher in the three months to the end of September than a year earlier, the Office for National Statistics said on Tuesday.

This was the weakest reading since June 2022.

While economists polled by Reuters had mostly forecast regular wage growth of 4.7%, the figure was in line with the BoE's forecast for the third quarter, published last week.

The BoE cut interest rates last Thursday for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the British government's first budget would lead to higher inflation and economic growth.

Private sector regular pay growth - a key measure of inflation pressure for the BoE - was also 4.8% higher in the three months to September, as the central bank had expected.

In a further sign of a loosening labour market, the number of job vacancies fell to its lowest level since May 2021.