By David Milliken
LONDON (Reuters) – British wage growth accelerated in the three months to May, in contrast to a downward trend in advertised salaries in the United States and the euro zone, according to figures from recruitment website Indeed released on Thursday.
The data contrasts with other numbers which show a cooling in Britain’s labour market, and may concern Bank of England policymakers who fear Britain could suffer a more persistent inflation problem than other major economies.
“Central bank policymakers have made it clear that wage growth slowing down to levels more in line with historic norms will be one of the criteria used to decide when to readjust monetary policies and stop raising interest rates,” Indeed said.
While markets expect the U.S. Federal Reserve to pause its rate-hiking cycle next week, the Bank of England is forecast to raise rates for a 13th consecutive meeting on June 22, and most likely take rate to 5.5% by November from 4.5% now.
Indeed said advertised salaries in Britain in the three months to the end of May were 7.2% higher than a year earlier, the fastest growth in data that goes back to early 2019.
By contrast, growth in advertised salaries in the United States slowed to 5.3%, after outstripping British wage growth throughout 2022, while in the euro zone it edged down to 4.7%.
Among big euro zone countries, salary growth was fastest in Germany at 6.2%, and weakest in Italy at just 1.6%. Pay growth remained on an upward trend in Spain and the Netherlands.
The rise in advertised salaries in Britain was greatest in nursing and low-paid roles such as retail, hospitality and cleaning. This likely reflected a 9.7% rise in the minimum wage in April and a government pay deal with nurses worth about 5%, Indeed said.
Britain saw a similar decline in the number of job vacancies relative to the number of people unemployed as in the United States and the euro zone, potentially pointing towards downward pressure on wages ahead.
Wage growth in Britain is still well below consumer price inflation, which was 8.7% in April, and in double digits for seven months before that.
Other data have shown more of a softening in the labour market. Britain’s Recruitment and Employment Confederation reported the weakest growth in starting salaries since April 2021 earlier on Thursday.
The most recent official data showed annual wage growth excluding bonuses for all employees – not just new starters – at 6.7% in the first quarter of 2023.
(Reporting by David Milliken, editing by Andy Bruce)
