Wages rising sharply and faster than expected after a year of slowing | Money News

Wages are rising far faster than expected after a year of slowing, official figures show.

Average pay rose sharply, by 5.2%, in the three months to October, according to data from the Office for National Statistics (ONS).

A month earlier wages had been growing by 4.4% including bonuses and 4.9% excluding bonuses.

The increase comes as a surprise – economists polled by the Reuters news agency had forecast increases of 4.6% and 5%.

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It follows more than a year of slowing rises and comes thanks to private sector pay rises, the ONS said.

Private sector pay grew by 5.4%, compared to 4.3% for the public sector.

Good jobs news could be bad for mortgages

There was no change to the unemployment rate which remained at 4.3% as expected, the ONS also announced.

The number of people on UK payrolls fell by 35,000 to 30.4 million between October and November, although this is subject to revision.

The ONS added that the number of vacancies fell by 31,000 to 818,000 in the three months to November.

It’s good news for workers seeking improved pay but may be bad news for people remortgaging in the new year.

High wages had been a concern for interest rate-setters at the Bank of England who seek to bring down inflation, which rose to 2.3% in October.

Gora Suri, an economist at PwC UK, said the rise in earnings growth shows that inflation pressures remain in the economy.

He said: “Despite the considerable disinflation we have seen in the UK economy over the last two years, these underlying inflationary pressures remain.

“This means that the Bank of England is highly likely to keep interest rates on hold at its next meeting on Thursday, before resuming rate cuts in the new year.”

A note of caution

The accuracy of this ONS data has been called into question numerous times in recent months.

The exact numbers of people at work are unknown in part due to fewer people answering the phone when the ONS calls.

Governor of the Bank of England Andrew Bailey described this as “a substantial problem”.

He said last month: “I do struggle to explain when my fellow [central bank] governors ask me why the British are particularly bad at this.

“The Bank, alongside other users, including the Treasury, continue to engage with the ONS on efforts to tackle these problems and improve the quality of UK labour market data.”

The ONS itself said it continued “to advise caution” when interpreting the data.

“Estimates of change should be treated with additional caution,” it said.