The latest employment data from the UK has come in a little better than forecast with the unemployment rate remaining near its lowest level since 1975. The monthly employment change for March showed 197k jobs added vs the 125k expected, but the main takeaway here is wages.
Despite wages for the month of March rising by less than expected (2.6% vs 2.7% forecast), with the CPI for the same month showed only a 2.5% increase it represents the first monthly pay rise for workers in real terms since last March. Furthermore, if we look at 'core' wage earnings and strip out the volatile bonus component the increase was even larger at 2.9%.
It would be premature to declare one pleasing data point as an end to the squeeze on real wages but with inflation expected to continue to fall lower in the coming months, as the impact of sterling’s rapid depreciation following the Brexit vote comes out of price pressures to a greater extent, then there could well be more good news for workers over the summer months.