UK Wage Growth Slows But May Leave Rate Cut Talks Off the Table

Bob Mason
Published: Nov 14, 2023, 07:29 GMT+00:00

UK wage growth dashed hopes of the Bank of England starting to discuss interest rate cuts. One of Civil Service payments blurred the picture.

UK Wage Growth


  • UK wage growth slows but not enough to raise bets on a Bank of England rate cut.
  • The UK unemployment rate held steady at 4.2%, another reason for restrictive monetary policy.
  • Next up, the US CPI Report

UK Wage Growth Slows but Remained Elevated

The UK Labor Market Overview Report garnered investor interest on Tuesday morning.

With the Bank of England focused on demand-driven inflation, wage growth was the focal point. Average earnings, incl. bonuses, rose by 7.9% in the three months to September 2023 vs. 8.1% in August. Economists forecast wage growth of 7.4%.

According to the Office for National Statistics,

  • The UK unemployment rate remained unchanged at 4.2% (Forecasts: 4.3%).
  • Job vacancies fell by 58,000 in the third quarter while up 156,000 since Q1 2020.
  • The employment rate declined by 0.1 percentage point to 75.7% in Q3 2023.
  • According to estimates, payrolled employees increased by 33,000 in October compared to September 2023.
  • One-off payments by the Civil Service in July and August 2023 affected average total pay, incl. bonuses.

While wage growth softened, the annual growth in regular pay (excl. bonuses) remained among the highest on record. Annual growth in regular pay (excl. bonuses) eased from 7.9% to 7.7%. The wage growth figures and steady UK unemployment rate could delay the timing of a BoE rate cut.

The numbers support Bank of England Governor Andrew Bailey’s recent statement, saying it is too early to discuss rate cuts.

GBP/USD Reaction to the UK Labor Market Overview Report

Before the UK labor market numbers, the GBP/USD fell to a pre-stat low of $1.22615 before rising to a pre-stat high of $1.22808

However, in response to the stats, the GBP/USD rose from an opening price of $1.22757 to a high of $1.22886.

This morning, the GBP/USD was up 0.07% to $1.22870.

GBP to USD responds to UK wage growth numbers.
GBP to USD 3 Minute Chart 14/11/23

Next Up

Bank of England speeches need monitoring. BoE Chief Economist Huw Pill is on the calendar to speak. Monetary Policy Committee member Swati Dhingra will also deliver a speech.

However, the US CPI report and Fed speakers will also garner interest. FOMC members Loretta Mester, Michael Barr, and Austan Goldsbee are on the calendar to speak on Tuesday. Reaction to the CPI Report needs consideration.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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