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UK regular wage in September shows fastest growth rate since 2008

UK regular wage in September shows fastest growth rate since 2008

Regular wage growth picked up in September to its fastest rate in almost a decade.

Excluding hefty bonuses, pay was up 3.2% year-on-year in the three months to September, the fastest increase on this measure since December 2008. 

This was a slight increase from the 3.1% in August and will be taken by the Bank of England that its forecasts for strengthening wage growth are materialising.

Real wage growth was plunged back into negative territory in the wake of the June 2016 Brexit vote, which caused a record drop in the value of sterling and pushed up inflation while nominal wage growth remained muted.

Growth of total pay including bonuses, also picked up to 3%, up from 2.8% previously, according to the Office for National Statistics (ONS).

In their inflation report earlier this month, the Bank projected average wage growth to accelerate to 3.25% over 2019, up from 2.75% this year.

The Bank has signalled that, in the outcome of a ‘smooth’ Brexit deal, it expects to raise internet rates again next year to contain inflationary pressure in the economy.

The jobless rate rose to 4.1%, from 4% previously according to the ONS, a possible sign that the long decline in unemployment is coming to an end.

Katherine Kent of the ONS said: “This stuttering pattern suggests the fundamental challenge of weak productivity growth, as seen over the past decades, persists.”

“With pay packets finally picking up, households and retailers will have something to cheer about as we reach the festive period. However, we’re unlikely to be entering a ‘new dawn’ for persistent wage growth just yet, as firms are facing ongoing struggles investing in their productivity.” Said Tej Parikh of the Institute of Directors.

However, the ONS also reported that UK productivity – output per hour – disappointed in the third quarter of 2018, falling by 0.4% wiping out most of the 0.5% increase in the second quarter.

This was due to a 1% jump in total hours worked in the third quarter.

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