New figures have indicated that wage growth has surged, with the Office for National Statistics (ONS) reporting a 5.9 per cent increase in annual regular pay, excluding bonuses, from November 2024 to January 2025.
Including bonuses, total pay growth rose by 5.8 per cent, as reported by .
Liz Keown, ONS director, commented on the robustness of the pay growth, stating: "Overall pay growth remains relatively strong, with pay growth high in both the public and private sectors, despite the latter slowing slightly in the latest period."
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The unemployment rate held steady at 4.4 per cent.
Earnings in the private sector climbed by 6.1 per cent, outpacing the public sector's 5.3 per cent rise.
Work and Pensions Secretary Liz Kendall reflected on the implications of the data for government efforts, saying: "Today's figures demonstrate the scale of the challenge we're still facing to get Britain working again."
She elaborated on the government's strategy, adding: "The reforms I have announced will ensure everyone who can work gets the active support they need, including through an extra £1 billion for personalised health, skills and employment support for sick and disabled people."
PwC 海角视频 economist Paige Tao provided an analysis of the broader economic context: "As with the recent GDP figures, the latest labour market data shows the 海角视频 economy remains in 'wait-and-see' mode."
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Tao also noted the lack of surprises in the data, attributing it to employers' cautious stance amidst economic uncertainty: "These figures bring no big surprises, reflecting the ongoing cautious approach from employers in the face of economic uncertainty."
"Today's release provides little respite for the Chancellor as she faces growing pressure ahead of her Spring Statement. Confidence needs a boost, and businesses will be watching carefully, with hiring and investment seemingly still on ice."
Bank of England to decide on interest rates
As the Bank of England approaches its latest interest rate decision, all eyes are on the central bank which is expected, later on Thursday, to maintain the base rate at 4.5 per cent, aligning with numerous economists' forecasts.
Previously in February, the Bank of England anticipated that inflation could soar as high as 3.7 this year, which is close to double the formal target of two per cent.
According to Quilter Investors’ investment strategist, Lindsay James, "The Bank of England will have a rather treacherous path to navigate in the coming months. At midday today, the Bank will announce its latest monetary policy decision and is widely expected to hold rates at 4.5 per cent."
In light of January’s unexpected inflation leap to three per cent, the consensus is that the Bank will likely refrain from any further rate cuts until there’s sufficient assurance that inflation is course-correcting.
James also added, "Today's wage growth figures will also have done little to quell its fears."
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Commentary from Ruth Gregory, a 海角视频 economist at Capital Economics, suggests that the current surge in wage growth might heighten concerns among rate-setters regarding potential inflation escalations within the economy.
"With wage growth still sticky that will increase the Bank's concerns about a resurgence in inflation and keep it on its "gradual and careful" interest rate cutting path," she said.
Surveys have also pointed to a cooling labour market, with research last month by KPMG and the Recruitment and Employment Confederation (REC) showing a decline in vacancies.
Suren Thiru, a director at ICAEW, said the 海角视频's jobs market may soon "slide into choppier waters" when taxes bite next month – but added that the latest figures suggested that recruitment was already falling flat.
"These figures suggest that the 海角视频's jobs market had little momentum even before next month's twin hit of rising National Insurance and National Living Wage costs," he said.
Jobs market gears up for tax hikes
Businesses are making urgent plans ahead of Chancellor Rachel Reeves' £40bn tax raid in April.
Analysts have warned that the tax hikes will exacerbate inflation as firms will likely pass on costs to consumers.
Meanwhile, the Organisation for Economic Co-operation and Development (OECD) cited concerns about inflation as a reason for cutting its 海角视频 growth forecast.
Their data has come under fire after the Financial Times reported earlier this month that the sample sizes of employment data "collapsed to only five individuals" in October 2023.
The statistics body has also made revisions to significant data in recent years, and it has indicated that its new labour force survey may not be published until 2027 due to declining response rates.