UK Pay Growth Stalls, Expected to Cool Further in 2024-25

Reuters report on a survey from UK hiring firm BrightMine.

In summary:

• UK median pay awards held steady at 4% in three months to September (prev: 4% in August)
• Expected median pay rise for year ahead drops to 3% vs 6% in 2023
• Public sector pay awards unchanged at 5.5%

• Survey covered 64 pay awards affecting 433k employees
• Forward guidance based on 289 firms representing ~500k workers
• Q2 2023 saw higher increases at 4.8%

Market Impact:

• Data aligns with BoE’s expectations for wage growth moderation
• Supports case for further rate cuts, with next decision due Nov 7
• UK inflation hit 3-year low of 1.7% in September

BoE Commentary earlier in October:

• Gov Bailey signals openness to faster rate cuts if inflation eases

And just yesterday:

• MPC’s Greene urges caution, citing longer-term inflation risks

The Bottom Line:
Survey suggests UK labor market cooling continues, though firms seek “creative ways” to retain talent amid skills shortages. Data broadly supportive of BoE’s dovish pivot. Wage growth dynamics will continue to play a role in BoE policy making.

This article was written by Eamonn Sheridan at www.forexlive.com.