Year-long wage squeeze nearing an end

Unemployment fell by 16,000 between December and February to 1.42 million.

People walking across Canary Wharf

The year-long squeeze on wages is nearing an end, official figures for the three months to February suggest.

Using the consumer prices index (CPI) average wages went up by 2.8%, still below the 2.9% inflation rate.

But the Office for National Statistics said when wages are compared with their new measure of inflation, including housing costs (CPIH), average weekly earnings rose by 0.2% year-on-year.

Inflation started to overtake wages in February last year, squeezing incomes.

Meanwhile, unemployment in the latest three-month period fell by 16,000 to 1.42 million, with the 4.2% unemployment rate the lowest since the three months to May 1975.

The Bank of England has said it expects the fall in unemployment to start pushing up pay more quickly, which is the main reason why it has said it is likely to raise interest rates more quickly than it previously thought.

The number of people in work has reached a record high of 32.2 million.

Analysis: Kamal Ahmed, BBC economics editor

The strength or otherwise of people's incomes is one of the most important drivers of our economy.

Not only is it of obvious importance to people individually - if each year I feel a little richer I tend to have a more positive outlook on life - but it is also the engine at the heart of our country's growth.

Household consumption accounts for about 60% of the value of the UK economy.

We are not just a nation of shopkeepers, we are a nation of shoppers.

If consumers are on average worse off - as they have been for the last year - then spending levels are put under pressure and economic activity slows.

That means we are producing less wealth, less tax income and less money for spending on things like the health service.

Tuesday's better news on incomes - month-on-month wages are now rising faster than prices - does not mean the good times are suddenly back.

On the more reliable three-month measure, December and February wages still rose less quickly than inflation.

And for many millions of people the last decade of anaemic incomes growth has left wages pretty much where they were in 2007.

And we haven't seen figures that miserable since Queen Victoria was on the throne.

Work and Pensions Secretary Esther McVey said: "Another milestone for employment has been reached under this government as employment reaches a record high, up 3.2 million since 2010 - the 16th time the employment record has been broken in the same period.

"Day-by-day we are helping people turn their lives around by getting into employment. Jobs are key to transforming lives and work is the best route out of poverty."

TUC general secretary Frances O'Grady said: "Unions have negotiated pay rises for workers across the UK, from the counters at McDonald's to the factory floor at Ford.

"But wage growth is still weak. Workers are £14 a week worse off than they were in 2007 - with pay packets not expected to return to their pre-crisis level until 2025."

Suren Thiru, head of economics at the British Chambers of Commerce, said: "The continued rise in employment, coupled with a further drop in the unemployment rate, is further evidence that the UK jobs market remains in good shape, with firms continuing to recruit despite sluggish economic conditions.

However, Mr Thiru said spending was unlikely to increase with "consumers expected to remain under pressure from uncomfortably high debt levels, particularly if interest rates rise further."

Meanwhile, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, does not think the figures mean an interest rate rise in May is a certainty.

He tweeted that the figures "place little pressure on the MPS to hike next month".

However, Ben Brettell, senior economist at Hargreaves Lansdown, disagrees.

"The figures reinforce expectations the Bank of England will lift interest rates at its May policy meeting. Markets are now pricing in an 85% chance of a rate rise," he said.




Date: 17 April 2018 | Source: BBC

More UK News

Pharmacists warn of a 'surge' in shortage of common medicines

Patients in England are struggling to get hold of drugs such as painkillers and anti-depressants

Police plan dig in hunt for Mary Duncan missing 43 years

Detectives plan to excavate land in the search for a young mum who vanished almost 43 years ago, BBC..

Coventry council 'slowest to fill potholes'

Some councils aim to fill potholes within minutes but others take more than a day, new figures show..

Banksy artwork in Port Talbot sold for 'six-figure sum'

Season's Greetings will remain in Port Talbot for "two to three years" as it is bought by a gallery..

Wakefield, Grimsby, Plymouth win share of £20m culture fund

Five areas in England will benefit from a new Cultural Development Fund to boost local culture

'My son's severe asthma is very distressing'

Every three seconds in the UK, someone has an asthma attack which could be life-threatening, a chari..
View More

More Telford News

 MP's warning over Broseley's Broxit move

Broseley Town Council has been told it cannot choose to complete a "Broxit..

 Future Fit: A&E recommendation rubber stamped

Health officials have confirmed their choice of Royal Shrewsbury Hospital ..

 Row over key document in Shropshire's Future Fit discussions

A row has broken out over a key document in Shropshire's Future Fit discus..

 Four admit role in violent family fracas in Telford

The trial of seven men accused of leaving two people with serious injuries..

 There is no place for Future Fit says leader of Telford & Wrekin Council

The Leader of Telford & Wrekin Council is calling on health bosses to ..

 Former coronary care nurse takes top business role at UK medical supply firm

A former coronary care nurse has taken a top role with one of the UK’s lead..
View More

Telford Businesses

Calendar Countdown

Upcoming Events in Telford

19 Jan 2019

Saturday 19 January 7.30pm


Tickets £25

View Details

25 Jan 2019

Friday 25 January 7.30pm


£22.50

View Details

31 Jan 2019

Thursday 31 January 7.30pm


Tickets £23

Concession £21.50

View Details

09 Feb 2019

Saturday 9 February 7.30pm


Adult: £26.50

Concessions: £23.50

View Details
View More