James Smith, Developed Markets Economist at ING, suggests that at 2.8%, the latest UK wage growth figure is a little weaker than anticipated but is unlikely to bat too many eyelids at the Bank of England.
Key Quotes
“The trend so far this year has been solid, supporting the Bank’s view that skill shortages in the jobs market are forcing firms to pay increasingly large sums to keep employees on board and attract new talent.”
“Admittedly, we think that last month’s 2.9% wage growth figure was probably a peak.”
“Separately, employment rose a little faster than expected at 146,000.”
“It’s the outlook for spending that ultimately holds the key to the timing of the next Bank of England rate hike.”
“We still feel an August rate hike is more likely than not, given what policymakers have been saying over recent weeks, as well as the better news on wage growth. But with the economy clearly still struggling to regain poise, nothing is guaranteed.”
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