James Smith, developed markets economist at ING, points out that as per the latest labour market data of UK, at 3.3%, regular pay growth is continuing to rise at a rate close to its post-crisis high.
Key Quotes
“The recent acceleration in pay growth has been driven by rising skill shortages across the economy, particularly concentrated in sectors such as construction and hospitality. Some of this is undoubtedly down to the lagged effect of earlier economic strength, but equally, there are a number of structural factors driving shortages of skilled labour which are unlikely to disappear rapidly.”
“For the time being then, higher wage growth, coupled with benign inflation, should give consumer spending a modest boost over the next few months. Amid all the uncertainty though, there are some early warning signs emerging from the jobs market.”
“Having said all of that, it’s still early days and for the time being, we don’t expect any of this to change the Bank of England’s positive outlook on wage growth.”
Share
