The UK’s employment statistics are unambiguously encouraging. Wednesday’s official figures showed employment rose and unemployment fell, strengthening trends in place over the past couple of years. Perhaps more significantly, rising nominal pay and zero inflation pushed real wage growth to its highest level since late 2007, driven by the private sector and the financial, retail and hospitality industries in particular. For a brief moment, it felt like the pay boom we’ve been waiting so long for may finally have arrived.
Not so fast. The Bank of England’s quarterly Inflation Report, published an hour after the Office for National Statistics data, gave the opposite message, downgrading nominal pay forecasts and increasing inflation expectations very slightly. As a result its real wage growth projection for the end of 2015 has fallen from 3% (above the pre-crisis trend rate of 2%) to 1.9% (very slightly below trend).
Many, including the Resolution Foundation, thought the Bank’s previous forecast overly optimistic, so some downward revision might have been expected. But the new outlook implies that any above-trend rebound in wages will have petered out by the end of this year. Understanding what’s prompted the Bank’s newfound caution provides a good sense of the obstacles in the way of our nascent wages boom.
via The Guardian
Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.
Alfonso Esparza
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Latest posts by Alfonso Esparza (see all)
- Market Rally Still Going Low Holiday Volumes Awaiting Start of 2020 - 27 December 2019
- Market Awaits China Retaliation on Trade - 29 November 2019
- Alibaba to Close Order Book Ahead of Huge IPO - 18 November 2019