Hopes that the Bank of England might be able to start cutting interest rates in August received a slight boost after new figures showed that wage growth eased in line with expectations.
Annual pay growth excluding bonuses averaged 5.7 per cent per cent between March and May, according to figures from the Office for National Statistics (ONS), down from 6.0 per cent last month and in line with expectations.
Including bonuses annual wages also at rose 5.7 per cent. This was down from 5.9 per cent previously and in line with expectations.
Unemployment was unchanged at 4.4 per cent, in line with expectations. The rate of joblessness has crept up from 3.8 per cent at the end of last year, although there are some uncertainties about the data.
The labour market figures are the last major set of statistics before the Bank of England’s latest interest rate decision in a couple of weeks time.
Minutes from the Bank’s last meeting in June showed that the decision to hold rates at 5.25 per cent was “finely balanced”, suggesting a number of rate-setters are actively considering a cut.
However, the odds of an August interest rate cut fell after inflation figures out yesterday came in slightly higher than expected.
The headline rate of inflation remained at two per cent for the second consecutive month. Services inflation, the Bank’s preferred indicator of domestic price pressures, also remained stuck at 5.7 per cent.