Growth in Britain's pay packets continued on a downward trend in April, new data showed today, casting doubt on Bank of England economists' contention that rising wage pressures will require interest rates to rise.
Average weekly earnings grew by 2.5 per cent in the three months to May, slower than an upwardly revised 2.6 per cent reading in April, according to data published 10 minutes late by the Office for National Statistics (ONS).
Growth in both total pay, including bonuses, and regular pay appears to have peaked, in January and March respectively.
Multiple members of the Bank of England's rate-setting monetary policy committee (MPC) have pointed to evidence that wage pressures are picking up amid a historically tight labour market, requiring interest rates to rise.
The UK's unemployment rate remained steady at 4.2 per cent, a four-decade low, while the employment rate – the proportion of all working-age adults in work – rose to 75.7 per cent, the highest in the 47 years the government has collected the data.
The number of people in employment rose by 137,000, below economists' expectations but still a faster pace than previous months.
Mike Jakeman, senior economist at PwC, said the "modestly good" labour market data "failed to hint at any improvement in wages". The moderate real wage growth, taking into account inflation, represents a "disappointing trend, given the apparent tightness in the labour market," he added.
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