UK Wage Growth Signals Dovish Undertones in Jobs Report
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The UK jobs report is more dovish than it looks
Private-sector wage growth in the UK barely increased in level terms between June and July, and alternative data from payrolls showed a second consecutive fall in median pay. We still expect a rate hike next week but with unemployment rising too, this latest data doesn't scream a need to lift rates much further.
The UK wage numbers are more dovish than they look at first glance.
At headline level, regular pay growth stayed at 7.8% on a 3M/YoY basis - no surprises there. But drill down and if you strip out the public sector, private sector pay barely increased in level terms between June and July. And if we look at the alternative wage data which is based on payroll figures (or PAYE), that actually fell in level terms for the second consecutive month.
Admittedly we do need to treat all of this with some caution. One month doesn’t make a trend and the latest private-sector regular pay figure, which is the bit the Bank of England is focused on, was preceded by several upside surprises over recent months.
But it comes alongside various signals that the labour market is cooling more noticeably.
Private sector pay barely increased in level terms
