The Bank of England may have inadvertently set off a dormant friction between the Office for National Statistics (ONS) and other private forecasters, which began about six months ago, with this simple line in the latest minutes of the Monetary Policy Committee (MPC).
Average Weekly Earnings (AWE) growth had slowed unexpectedly in March. There was some uncertainty around the precise trends owing to the effect of the reduction in the top rate of income tax in 2013. Further work was needed to investigate the differences between the official data and a range of survey indicators, which were significantly stronger.
"Differences" is a polite way to describe the now colossal gap between survey and official wage growth measures - the indicators don’t always track each other perfectly, since they measure slightly different things.
But during the financial crisis and recession, the REC/KPMG measure (produced by Markit) preceded the official measure with relative reliability. It began to drop just before the ONS recorded the same (since ONS figures are published with a longer lag), and rebounded from the lows similarly.
But now, the private figures have been reporting sustained and strong growth in wages for over a year, and the ONS figure is still anaemic at best. You can see from the graph that the gap is much larger than it previously was.
The Bank confirmed that some MPC members are concerned about the gap, and Markit chief economist Chris Williamson said the massive disparity is confusing people on his end too: "We’re still scratching out heads as to why those official data have been so weak – they’re the one now divergent from all the others."
Markit first started discussing the big disparity on the labour market in October, when it published this piece on the productivity puzzle. Markit then noted the flipside of the divergence on wage growth - the ONS' measures of private sector employment growth and the number of hours worked show much stronger growth than private surveys indicate.
We may have to wait until at least September to find out what's going on - when the ONS will announce revisions to its estimates of labour market data, "including estimates of employment, unemployment and economic inactivity". Recent changes to national accounts data have shown just how much methodological reviews can change what we think about the shape of the economy.