UK wage growth edges higher as hiring data point to stabilisation
British pay growth accelerated modestly and payroll figures improved, potentially strengthening the case for a Bank of England rate increase next month.
London, United Kingdom. Official British labour figures showed a further modest acceleration in wage growth and tentative signs that hiring was stabilising. The data could strengthen arguments for a Bank of England interest rate increase next month.
Earnings growth exceeds forecasts
The Office for National Statistics said weekly earnings excluding bonuses increased by 3.7 per cent over the three-month period ending in August, measured against the corresponding period in 2025. Economists surveyed by Reuters had forecast growth of 3.6 per cent.
The result continued a gradual recovery from a low of 3.4 per cent earlier this year. The estimate covering the three months ending in July was also nudged upwards to 3.6 per cent.
Private-sector wage growth edged up to 3.0 per cent from 2.9 per cent, recording its first acceleration since late 2024.
Payroll estimates improve
A preliminary tax-office estimate showed that the number of employees on payrolls increased by 13,000 in September. Revised August figures showed an increase of 1,000, replacing an initial estimate of a 26,000 decline.
The unemployment rate fell to 4.7 per cent over the three-month period ending in August, reaching its lowest level since mid-2025. That measure comes from a survey currently being overhauled by the ONS.
Following a succession of economic growth readings that exceeded expectations, the employment figures suggested the hiring slowdown might be reaching a floor. That offered some positive news for finance minister John Healey before his first budget next week.
Budget seen as important to recovery
Jack Kennedy, senior economist at jobs website Indeed, said the figures showed resilience consistent with the broader economy’s unexpectedly strong performance.
“The latest figures indicate a labour market showing some resilience, echoing the wider economy’s better-than-expected performance,” he said.
Kennedy nevertheless characterised the employment market as broadly stagnant and said the prospects for a more substantial recovery depended on Healey’s budget giving employers an incentive to recruit.
Healey’s predecessor, Rachel Reeves, increased an employer tax in 2025, after which hiring declined.
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