UK wage growth slows in April

UK wage growth slows in April

UK wage growth has unexpectedly slipped to 2.8 percent, falling short of analyst expectations.

The Office for National Statistics has reported the 0.1 percent fall for the first three months in April despite unemployment falling to 1.42 million.

Economists had predicted a steady wage growth for the three months to April

The decline in wage growth has raised doubts over whether the Bank of England plans to raise interest rates over the coming summer.

The Bank of England has previously suggested that it will raise rates this year if the economy bounces back as it has expected.

The hike is increasingly unexpected following the slowing wage growth and poor manufacturing data for April. 

Howard Archer of the EY Item Club said: “Strong employment but softer earnings growth will likely keep uncertainty high about the prospects of an August interest rate hike by the Bank of England.”

“We suspect that there is an increased chance that the Bank of England will hold fire on interest rates until November given that the MPC wants to see clear, sustained evidence that the UK economy has improved from its first quarter relapse before hiking,” he added.

The Bank of England remains optimistic and is expecting wage growth to pick up and reach 3.5 percent by the end of 2020.

“Wage growth is stuck in the slow lane. At this rate pay packets won’t recover to their pre-recession levels for years,” Frances O’Grady, the TUC’s General Secretary.

“We need to speed things up. Extending collective bargaining would boost living standards and help workers get a fairer share of the wealth they create.”

The slowing wage growth is partly due to the lack of investment in new machinery and technology since the financial crisis and the public sector pay freeze followed by the 1 percent pay cap.