The rate of wage increase in the United Kingdom was the highest ever. Inflationary pressures in the labor market, however, appear to be diminishing, which may make the Bank of England's job simpler in the future.
Adjusted up from 7.2% in the initial estimate, the Office of National Statistics reports that the basic income increased by 7.3% in the three months ending in May. The rise continued during the second quarter of 2021.
Reuters' survey of economists produced an average growth projection of 7.1%.
After the publication of the statistics, the pound sterling saw a small increase in value in comparison to the euro and hit its 15-month high against the US dollar. The daily gain for the pound was 0.3%.
However, data also show that tensions in the labor market are easing. In the three months leading up to April, the unemployment rate increased to 4.0% from 3.8%, while the number of job openings dropped to its lowest level since the middle of 2021.
In early trading, yields on two-year British government bonds, which are highly reactive to interest rate speculation, dropped by roughly three basis points.
Even after 13 straight interest rate hikes, the Bank of England pays close attention to the growth of wages since this metric enables us to evaluate the degree of inflationary pressure that still exists in the UK economy.
On Monday, the governor of the central bank, Andrew Bailey, stated that wage rises, as well as prices for products and services, are rising at an unsustainable rate. He also committed to taking the necessary steps to combat inflation, which now sits at 8.7% and is higher than any other major economy.
Economists have pointed out that the Bank of England might observe a sufficient slowdown in the data to put a brake on rate hikes in the near future; however, this most likely won't occur when the Bank of England announces its next monetary policy on August 3rd.
The Office for National Statistics reports that salary growth, including bonuses, has increased to 6.9% annually. This is the greatest rate on record, surpassing even the period of the coronavirus pandemic when data were skewed by government subsidies.
Login in Personal Account
105
