KPMG comments on today’s labour market figures
"Pay growth continues to present a conundrum for the Bank of England” says Yael Selfin, Chief Economist at KPMG UK.
"Pay growth continues to present a conundrum for the Bank of England” says Yael Selfin.
“The labour market is starting to feel the weight of slowing activity as the UK economy faces several headwinds. The unemployment rate rose to 4.3%, vacancies are down below 1 million, and job-to-job flows have moderated suggesting that workers are less confident to switch positions.
“However, earnings growth came in at 8.5% overall and 7.8% excluding bonuses. Today’s pay data has significance not just for monetary policy but also for government spending, as the July figure determines the uprating of pensions next year under the triple lock guarantee.
“Despite clear signs of weakening momentum, we still expect the Bank of England to raise interest rates by 25 basis points next week, although the threshold for further increases may be hard to meet given the current economic outlook.”
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