Labour Market Continues to Charge Ahead

Main points

• The latest ONS estimates suggest that the annual growth rate of average weekly earnings, including bonuses, was 6.5 per cent in the three months to April, while pay growth excluding bonuses was 7.2 per cent - representing the largest growth rate in regular pay recorded outside of the pandemic period. Our forecast for the second quarter of this year sees these figures at 6.8 and 6.7 per cent, respectively.
• The disparity in public and private-sector wage growth has risen for the first time in six months, with private sector regular pay growing by 7.6 per cent while regular pay in the public sector grew by 5.6 per cent. Our forecast sees these figures at 6.9 per cent and 5.9 per cent, respectively, in the second quarter of 2023.
• The employment rate increased by 0.2 percentage points to 76.0 per cent in the three months to April. This rate remains 0.6 percentage points below its pre-pandemic level. Still, total hours worked reached a record high in this three-month period, surpassing pre-pandemic levels.
• The economic inactivity rate decreased by 0.4 percentage points in the three months to April, to 21.0 per cent. This was driven by those inactive for other reasons and those looking after family or home.

“Today’s ONS estimates suggest that average weekly earnings, excluding bonuses, grew by 7.2 per cent across the whole economy in the three months to April, representing the largest growth rate in regular pay recorded outside of the pandemic period. The private and public sectors saw regular pay growth of 7.6 per cent and 5.6 per cent, respectively.  The employment rate increased by 0.2 percentage points to 76 per cent in this three-month period, while total hours worked reached a record high, surpassing pre-pandemic levels. It seems that the cooling labour market that high-frequency indicators have been pointing to is yet to materialise. “

Paula Bejarano Carbo
Associate Economist, NIESR

See here to see our previous wage tracker