UK wage growth slows but probably still too high for BoE

People walk over London Bridge looking at a view of Tower Bridge in the City of London financial district in London, Britain, Oct 25, 2023. REUTERS/ Susannah Ireland/file photo

LONDON  -British wage growth slowed more than expected in the three months to the end of October, official data showed, but pay is probably still increasing too quickly to persuade the Bank of England to cut interest rates any time soon.

Earnings excluding bonuses were 7.3 percent higher than a year earlier, the figures from the Office for National Statistics (ONS) showed on Tuesday.

Economists polled by Reuters had forecast a 7.4 percent rise.

The figure represented a slowdown in regular pay growth from an upwardly revised reading of 7.8 percent growth in the three months to September and from a peak of 7.9 percent immediately before that, the highest since the ONS began collecting the data in 2001.

Including bonuses, which are typically volatile, pay growth slowed to 7.2 percent from 8 percent in the three months to September.

READ: Bank of England keep rates at 15-year high, rules out quick cuts

The BoE is worried that pay growth, especially in the private sector, is still too strong to get inflation down to its 2 percent target, even as the broader economy stagnates.

Earnings excluding bonuses in the private sector dropped to 7.3 percent in the three months to October compared with 7.9 percent in the July-September period.

The central bank raised interest rates 14 times in a row between December 2021 and August this year, since when it has kept rates on hold. It is expected to keep borrowing costs unchanged again on Thursday.

READ: UK labor market loses more steam as BoE mulls rates stance

However, officials have stressed that they are not close to thinking about cutting borrowing costs.

Sterling weakened briefly against the U.S. dollar after the ONS released its figures.

Tuesday’s data also showed that Britain’s unemployment rate held at 4.2 percent in the three months to September while employment rose by 50,000 people.

The ONS has said those figures may not prove reliable as it has had to change the way that it measures the jobs market via its monthly Labor Force Survey because of a drop in the number of responses it receives.