The latest official data from the Office for National Statistics (ONS) reveals a deceleration in UK wage growth and concerning signs of a stalled job market, posing challenges for economic recovery.
Pay growth, excluding bonuses, eased to 7.3% in the three months to October, accompanied by a drop in job vacancies.
While the pace of earnings growth has slowed, it still outpaces inflation, suggesting a potential deterrent for the Bank of England (BoE) to cut interest rates in the near term.
The number of individuals on payrolls decreased, and job vacancies fell by 45,000 between September and November. According to Darren Morgan, director of economic statistics at the ONS, this marks the longest consecutive decline of vacancies on record.
Despite this decline, overall vacancies stand at 949,000, well above pre-pandemic levels.
Furthermore, although inflation eased to 4.6% in October, it remains more than double the Bank's 2% target. Financial markets and some economists anticipate potential interest rate cuts from the current 5.25%, following the Bank's previous rate hikes.
However, BoE Governor Andrew Bailey emphasised last month that it's "much too early" to be thinking about rate cuts. As the Bank is expected to announce its latest decision today (14 December), the prevailing economic indicators and the decline in job vacancies pose a dilemma for policymakers, with the likelihood of interest rates remaining unchanged for the third consecutive time.
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