Sterling rises as UK wage growth edges up (but sticks below the rate of inflation)

Emma Haslett
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UK wage growth edged higher, but unemployment fell to its lowest ever (Source: Getty)

The pound strengthened this morning after official data showed growth in UK wages had risen in the second quarter as unemployment hit another record low.

Sterling rose 0.2 per cent against the dollar to $1.2894 after figures from the Office for National Statistics (ONS) showed wages excluding bonuses had risen by 2.1 per cent between April and June, against expectations of two per cent.

And having fallen to a new low against the euro in the run-up to the release, the pound bounced 0.2 per cent against the single currency, rising to €1.0991.

Including bonuses, wages rose 2.1 per cent, from 1.9 per cent in the three months to May and against expectations of 1.8 per cent.

However, household costs are still rising faster than wages: inflation data yesterday showed the consumer prices index stuck at 2.6 per cent in July, pushed up by higher food, clothing and energy prices.

Meanwhile, claimant count fell by 4,200, compared with forecasts of a fall of 3,700. Unemployment fell to 4.4 per cent, a record low, from 4.5 per cent in the previous quarter.

“For the past ten years our earnings have flatlined," said Maike Currie, investment director for personal investing at Fidelity International.

"This could be down to automation, more people working part-time and the growing cohort of self-employed people with limited earning power, such as Uber and Deliveroo drivers in the so-called ‘gig economy’.

“Unfortunately the outlook doesn’t look much brighter for Britain’s workers. The latest report from Chartered Institute of Personnel and Development says employers are predicting an average of one per cent increase in wages in the next year, while the Bank of England has pointed out that uncertainty over the economic outlook may be affecting companies’ willingness to raise pay - it expects regular pay growth to remain subdued for the rest of 2017."

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