Wage growth eased in line with expectations, new figures show, helping to pave the way for further interest rate cuts this year.
Excluding bonuses, pay growth eased to 4.9 per cent in the three months to August, down from 5.1 per cent previously.
This was in line with expectations and the slowest rate of pay growth since June 2022.
Including bonuses, annual wage growth fell to 3.8 per cent, down from 4.0 per cent and slightly ahead of the 3.7 per cent expected by economists.
Unemployment, meanwhile, fell to 4.0 per cent whereas economists had predicted it would remain at 4.1 per cent.
This suggests the labour market remains tight, although there is a lot of uncertainty about the figures as the Office for National Statistics revamps its data collection.
Strong wage growth has been a concern for policymakers at the Bank of England due to fears that it could keep cost pressures elevated, particularly in the labour-intensive services sector.
Larger pay packets also mean consumers have more disposable income, enabling them to spend more on goods and services.
But pay growth has eased from peaks of around eight per cent last summer, suggesting that the Bank’s aggressive rate hikes have successfully contained inflationary pressures.
The Bank cut interest rates for the first time since the pandemic in August and markets expect at least one further rate cut this year.
Inflation figures for September will be published tomorrow.
More to follow