On Tuesday, economists from ING provided insights into the current state of the UK's wage growth and its implications for the Bank of England's monetary policy. According to their analysis, wage growth is "temporarily stuck in the 6% area," which may influence the central bank's decision to postpone interest rate cuts until August. This assessment comes despite indications of a cooling jobs market.
The latest UK jobs report presents a complex picture, with an unexpected jump in private sector pay drawing attention. Regular pay, excluding bonuses, saw a significant 12% increase on a month-on-month annualized basis.
However, ING economists caution that one month's data is not indicative of a trend. When averaging the past three months and comparing it to the same period from the previous year, private sector wage growth has marginally decreased to 6.0%.
The Bank of England has previously indicated that it considers month-on-month changes in pay when making policy decisions. Although the recent surge in wages may not establish a trend, it is expected that the central bank's policymakers will closely monitor upcoming data to determine if this level of monthly growth persists. The next set of employment data will be particularly scrutinized to assess whether the current wage growth rate continues.
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