(Bloomberg) — UK wage growth slipped below 6% for the first time in 20 months, the latest sign of a cooling labor market as the Bank of England considers whether it can cut interest rates next month.
Average earnings excluding bonuses rose 5.7% in the three months through May, down from 6% in the period through April, the Office for National Statistics said Thursday. It was in line with the median expectation of economists. Private-sector wage growth — which is being watched most closely by the BOE for signs of a tight labor market — slowed to 5.6% from 5.9%.
Unemployment held at 4.4%, the highest rate since 2021. The pound was little changed following the data.
The figures complicate the decision facing BOE policy over whether underlying price pressures are easing fast enough begin cutting interest rates from a 16-year high. A stronger-than-expected reading on services inflation on Wednesday prompted traders to scale back interest-rate bets, with investors now putting the chance of a cut when policymakers meet on Aug. 1 at just 30%, down from almost 50% on Tuesday.
Officials have been watching the labor market for signs of price “persistence” as they gauge whether they cut rates without pushing inflation back above the 2% target.
–With assistance from Joel Rinneby and Mark Evans.
©2024 Bloomberg L.P.