Wages in the U.K. rose the most in over six years amid an unexpected rise in the number of new jobs created, according to new data released Wednesday.
Pay, excluding bonuses, rose by an annualized 2.9 percent in the period between May and July, the highest growth since 2009, according to the Office for National Statistics (ONS), cited by Bloomberg. An additional 42,000 people found work, but 10,000 more people were jobless compared to the February-April period, leaving the overall unemployment rate at 5.5 percent, unchanged from the previous quarter but down from 6.2 percent in the same period last year.
Chancellor George Osborne said he was pleased with the results. "It is welcome news that pay packets are rising and jobs are being created. With wages up 2.9 percent over the year and inflation low, working people have received the fastest real-terms rise in over a decade,” he said, according to the BBC. "At 73.5 percent, the employment rate is the highest it has been."
State statistician Nick Palmer said the new data boded well for Britain’s economy. "Although there has been a small rise in the unemployment level, employment is also up on the previous three months, with its headline rate returning to a record high. Meanwhile regular pay – not including bonuses – is growing at its fastest for over six years," he said, according to the Guardian.
Ten consecutive quarters of growth have left the U.K. with its lowest unemployment rate in seven years, compared to an overall jobless rate of 10.9 percent in the eurozone.
"The long-awaited upturn in pay, which has been the missing element of the UK's economic recovery, looks to be finally upon us, reviving the prospect of a rate hike by the end of the year,” Chris Williamson, chief economist at financial services company Markit said, according to the BBC, referring to a possible interest rate hike from the Bank of England.
"Strip out the public sector and private sector pay rose at an annual rate of 3.4 percent (both including and excluding bonuses) in the three months to July," Williamson said, adding: "This is a rate of increase that would normally worry policymakers into a pre-emptive hike in interest rates to avoid upward wage pressures feeding through to higher inflation."
However, Capital Economics economist Paul Hollingsworth told IBTimes UK that the data did not necessarily signal a coming interest hike.
“We don't think that the latest data indicates that the MPC (Monetary Policy Committee of the Bank of England) are likely to follow the Fed and raise rates this year. Indeed, greater scope for a productivity rebound in the U.K. than in the U.S. means that growth in unit wage costs will stay modest despite faster wage growth. Accordingly, we still think that the MPC can hold off until around Q2 next year."