Wages have risen while unemployment unexpectedly saw no change, official figures show.
Average weekly earnings rose 6% in the three months to December, data from the Office for National Statistics (ONS) showed, while wages – excluding bonuses – grew 5.9%, despite economists expecting a 5.8% rise.
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Even with inflation factored in, wages are still rising. In the same month as earnings grew 6%, prices rose at a rate of 2.5%.
This marks the third month in a row of wage growth after a year of slowing. In November, both basic pay excluding bonuses, and average weekly earnings, rose at an annual rate of 5.6%.
Both private and public sector worker pay increased.
But the growth is expected to end and the rises are anticipated to slow to 3% by the end of the year, according to the chief economist at KPMG UK, Yael Selfin.
“We expect a steady downward trend over the coming months”, she said.
Increased costs for employers from higher minimum wage and upped national insurance costs are forecast to dampen wage growth.
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The minimum wage rise was announced in October
An unemployment surprise
The unemployment rate remained unchanged at 4.4%. A rise was anticipated by economists who were polled by the Reuters news agency.
The number of job vacancies also continued to fall in the latest three-month period, albeit more slowly, with the total number remaining a little above its pre-pandemic level.
The ONS, however, has advised caution in interpreting changes in the monthly unemployment rate due to questions over the reliability of the figures.
The exact number of unemployed people is not known – partly because people don’t answer the phone when the ONS calls.
What does it mean for interest rates?
Traders were pricing in a slim chance of an interest rate cut, of just 28%, before the data was released – but the likelihood fell to 25% after the announcement.
Better wages can fuel inflation, which the interest rate setters at the Bank of England are fighting to bring down.