UK pay growth slows as jobs market stalls

Wage growth has slowed and the UK jobs market is showing signs of stalling, according to latest official figures.

Pay growth, excluding bonuses, eased to 7.3% in the three months to October while the number of vacancies dropped.

But while earnings are not rising as quickly as before, they are still outpacing inflation - which measures the rate at which prices are growing.

This suggests that the Bank of England is less likely to cut interest rates anytime soon.

The number of people on payrolls eased while UK job vacancies also continued to fall, this time by 45,000 between September and November.

"This is now the longest period of decline on record, longer than in the immediate aftermath of the 2008 downturn," said Darren Morgan, director of economic statistics at the Office for National Statistics, which published the figures.

It is the 17th month in a row that the number has fallen.

However, overall vacancies totalled 949,000, which Mr Morgan said "remains well above pre-pandemic levels".

Inflation has been falling following a long run of interest rate rises by the Bank of England. This has prompted financial markets and some economists to suggest the Bank may soon start cutting interest rates from the current level of 5.25%.

But while inflation has eased to 4.6%, it remains more than double the Bank's target of 2%. In addition, regular pay grew faster than inflation in the three months to October.

Last month, the Bank of England's governor Andrew Bailey said it was "much too early to be thinking about rate cuts".

The Bank is widely expected to hold interest rates when it announces its latest decision on Thursday.

Yael Selfin, chief economist at KPMG UK, the accountancy firm, said: "While momentum has weakened, the labour market is still tight.

"The Bank of England will remain alert as continued tightness could cause a setback in its battle against inflation, particularly if strong wage growth contributes to persistence in domestic inflation."