In the three-month period ending in August, the UK experienced its slowest wage growth in over two years, reinforcing expectations for further interest rate cuts by the central bank at its upcoming meeting.
According to data released by the Office for National Statistics on Tuesday, average earnings, excluding bonuses, rose by 4.9% compared to the previous year. This marks a slowdown from the 5.1% increase seen in the three months leading up to July. This is the slowest increase since June 2022 and aligned with projections.
When including bonuses, earnings increased by 3.8% annually, consistent with projections, following a 4.0% rise in the previous period.
The unemployment rate observed a slight decline to 4.0% in the three months to August, contrary to predictions that it would remain unchanged at 4.1%.
In September, payroll employment saw a decrease of 15,000, bringing the total to 30.3 million.
Additionally, the data indicated a continuous decline in vacancies for the 27th consecutive period. During the third quarter, vacancies fell by 34,000, reaching 841,000.
August recorded an estimated 31,000 working days lost due to labor disputes. The combination of another decline in wage growth and indications of a progressively loosening labor market strengthens the prevailing expectations that the Bank of England (BoE) will reduce interest rates by 25 basis points to 4.75% at its next policy meeting in November, according to Ashley Webb, an economist at Capital Economics.
James Smith, an economist at ING, anticipates that the BoE will lower rates in November, December, and at every subsequent meeting until the rate reaches 3.25% by next summer.
The BoE maintained its benchmark rate at 5.00% during its September meeting after a quarter-point reduction in August, marking the first rate cut since 2020.
