UK Workers’ Earnings Growing at Fastest Rate in More than Two Years

Wages for UK workers grew at their fastest rate in more than two years in January, and unemployment has fallen back down to historic lows, the Office of National Statistics (ONS) has revealed.

In the three months to January, total average weekly earnings jumped by 2.8 per cent year-on-year, the fastest recorded growth rate since September 2015, according to an ONS labour market bulletin.

The news makes it more likely that the Bank of England will put up interest rates again in the near future.

Earnings for employees including bonuses increased by 2.8% on the year in cash terms but were unchanged after taking inflation into account https://t.co/eO0xGRtutP pic.twitter.com/8hCPzwTjHx

— ONS (@ONS) March 21, 2018

The rate of inflation across the UK fell to its lowest level since July in February, the ONS revealed on Tuesday, likely easing the cost of living.

Mainly thanks to a fall in the value of the pound, inflation rose after the Brexit vote. The currency devaluation also boosted exports.

Meanwhile, headline unemployment rate – the percentage of people who want a job but do not have one – dropped from 4.4 per cent to 4.3 per cent, reversing an increase seen in unemployment reported last month.

There were 32.25 million people working in the UK in the three months to January this year, 402,000 more than for a year earlier.

Over the same period, 75.3 per cent of people aged 16 to 64 were in work, the equal highest employment rate since records began in 1971.

For the three months to January 2018, the unemployment rate was 4.3%, down from 4.7% for a year earlier. The unemployment rate has not been lower than 4.3% since 1975 https://t.co/MGuPdTk8QW pic.twitter.com/v4eOEQ6FCy

— ONS (@ONS) March 21, 2018

“Employment and unemployment levels were both up on the quarter, with the employment rate returning to its joint highest ever,” Matt Hughes, a senior statistician at the ONS, said.

“‘Economically inactive’ people – those who are neither working nor looking for a job – fell by their largest amount in almost five and a half years, however.”

In November last year, the Bank of England said that in its view, Brits were beginning to benefit from a rise in wages due to a shortage of labour across sectors that emerged after the Brexit vote.

Whilst not specifically naming immigration, bank economists spoke of “labour market tightness leading to upward wage pressure”, which is likely to be linked to a fall in the availability of migrant labour.