The wage growth in the UK has softened to its lowest point in over two years during the three months leading up to August, reinforcing predictions that the central bank may implement further interest rate cuts in its next meeting.
According to data from the Office for National Statistics released on Tuesday, average earnings without bonuses rose by 4.9 percent year-on-year in the three months to August, down from a 5.1 percent increase in the three months to July.
This marks the slowest growth since June 2022 and aligns with expectations.
When bonuses are included, earnings increased by 3.8 percent annually, as anticipated, following a 4.0 percent rise in the previous period.
The unemployment rate saw a slight decline to 4.0 percent in the three months to August, while forecasts predicted it would remain stable at 4.1 percent.
In September, payroll employment fell by 15,000, bringing the total to 30.3 million.
Data indicates that the number of job vacancies has decreased for the 27th consecutive period, with a decline of 34,000 in the third quarter, leaving 841,000 vacancies.
Approximately 31,000 working days were lost due to labor disputes in August.
With another decline in wage growth and indications that the labor market is gradually loosening, expectations are building that the Bank of England (BoE) will reduce interest rates by 25 basis points to 4.75 percent in the upcoming policy meeting in November, according to Capital Economics economist Ashley Webb.
ING economist James Smith anticipates rate cuts from the BoE in November and December, continuing at each subsequent meeting until the rate reaches 3.25 percent by next summer.
In its September meeting, the BoE held its benchmark rate steady at 5.00 percent after a quarter-point reduction in August, marking the first rate cut since 2020.
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