UK wage growth defies forecasts but slows to lowest level in more than a year

investmentweek.co.uk:

Economists have advised against heavily relying on LFS data, citing persistent concerns about its quality.

Annual growth in regular earnings, excluding bonuses, was 6.2% in the three months to December, slowing from 6.7% in the prior three-month period. Although economists had forecast a 6% reading, this was the slowest growth seen since the third quarter of 2022. 

The annual pace of growth in total earnings, including bonuses, stood at 5.8% in the quarter, down from 6.7% in the three months to November.

When accounting inflation, annual growth in real terms rose 1.4% for total pay and 1.8% for regular pay compared to the same period in the previous year. UK inflation rose by 4% in the 12 months to December, up from 3.9% in November.

UK statistics regulator withholds endorsement of UK jobs data — reports

«The recent trend lower in inflation, while good news, has largely been driven by a collapse in goods prices. The key watch item for the Bank lies in whether consumption reaccelerates as consumers find their feet,» said Hugh Gimber, global market strategist at JP Morgan Asset Management.

«This would be good for growth but would also present upside risks to inflation, particularly in services sectors where prices tend to be more closely linked to wages.»

As a result, with today's print pointing to some signs of slowing in a still strong labour market, Gimber said «significantly more evidence» of cooling is likely required before the Bank of England is ready to consider cutting rates.

In the last quarter of the year, unemployment stood at 3.8%, surpassing expectations and decreasing from the 3.9% reported in the November period, according to the newly reinstated Labour Force Survey released today.

«The external market is