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UK witnesses steep drop in wage growth, prompting expectations of interest rate drops

Posted on January 22, 2024 |

Wage growth in the UK has slowed to the lowest point in 10 months, sparking hopes that the Bank of England might lower interest rates as the job market cools down.

Despite the slowdown, workers can find some relief as earnings continue to rise more than the cost of living for the 5th month in a row.

In the three months to November, average regular earnings (excluding bonuses) grew by 6.6%, down from the revised 7.2% in the previous three months.

This is the slowest rate since the 3 months leading to January last year and one of the most significant drops in earnings growth during the pandemic.

Considering Consumer Prices Index (CPI) inflation, pay went up by 1.4% over the same period, contributing to a rise in real wages since July amid a slowdown in UK inflation.

Meanwhile, job vacancies fell by 49,000 in the three months to December, marking the 18th consecutive period of decline.

The rate of UK unemployment remained unchanged at 4.2% in the three months to November.

The number of UK workers on payrolls also fell by 24,000 to 30.2 million for December, compared to November.

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