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UK wage growth slows further

Pay growth eases to slowest pace since January last year.

16 January 2024

Average weekly earnings (excluding bonuses) over the three months to end of November grew at 6.6% on a year-on-year basis. The previous reading was 7.2% and a shift lower to 6.7% was expected, so this was not too far off the mark and obviously subject to some revision. What is important is how the Bank of England (BoE) view this as they were expecting pay growth to remain higher at this point.

The unemployment rate held steady at 4.2%. A softening in wage growth will hopefully help extinguish any fears of persistent vicious wage-inflation spirals. If anything, as wage growth cools, inflation should cool too in a virtuous spiral but we are only still at the first part of that journey with wage growth still at the high-end for the BoE at least. Every journey starts with small steps and as we see inflation approach the BoE’s 2.0% target, calls for rate cuts will grow ever louder.

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Charles Hepworth

Investment Director
My Insights

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