Labour market weathering an increasingly difficult economic environment
- According to new ONS statistics published this morning, UK average weekly earnings (AWE) expanded by 3.8 per cent (excluding and including bonuses) in the three months to August compared to the year before (figure 1).
- With CPI inflation at 1.9 per cent in the three months to August, real wages grew at an annual rate of 1.9 per cent over the same period.
- Private sector earnings data in August turned out to be in line with the estimate published in our Wage Tracker last month and public sector earnings data was only slightly weaker.
- The Wage Tracker indicates that regular earnings growth will have stabilised at an annual rate of 3.8 per cent in the third quarter and is expected to remain largely unchanged in the fourth quarter.
- Based on NIESR Wage Tracker and GDP Tracker information, we estimate unit labour cost growth of around 3½ per cent per annum in the third and fourth quarters of 2019 while economic activity remains lacklustre.
Dr Arno Hantzsche, Principal Economist in Macroeconomic Modelling and Forecasting, said:“In the economy as a whole, employment and wage growth are now stabilising amidst global and domestic uncertainties. While sectors engaging in international trade increasingly face difficulties, also affecting hiring and pay, domestically active service sectors are so far withstanding the economic challenges.”