British workers’ pay grew at its joint fastest pace in over a decade, fuelled by further job creation, adding to suggestions that Brexit uncertainty is prompting firms to hire workers rather than make longer-term investment in equipment.
Total earnings, including bonuses, rose by an annual 3.5 per cent in the three months to February, the Office for National Statistics said, matching the median forecast in a Reuters poll of economists.
That was the joint highest rate since mid-2008 although in February alone the pace of wage growth slowed, reports Reuters.
Average weekly earnings, excluding bonuses, rose by 3.4 per cent on the year, also in line with the Reuters poll.
It was the first fall in that measure of pay growth since the middle of last year.
Britain’s labour market has defied the approach of Brexit, helping households whose spending drives the economy.
However, the surge in jobs could reflect nervousness among businesses who have cut investment, making them more likely to hire workers who can be sacked in the event of a downturn in the economy.
The ONS said employment grew by 179,000 in the three months to February, in line with the Reuters poll forecast.
“The jobs market remains robust, with the number of people in work continuing to grow,” ONS statistician Matt Hughes said. “The increase over the past year is all coming from full-timers, both employees and the self-employed.”
The strength of the labour market is pushing up the official measurement of wages more quickly than the Bank of England has forecast, leading some economists to think it might raise interest rates once the uncertainty about Brexit lifts.
The BoE forecast in February that wage growth would slow to 3.0 percent by the end of 2019 as the economy feels the drag of Brexit uncertainty and a global slowdown.
It also forecast that Britain’s economy will grow at its slowest rate in a decade this year, even if it avoids the shock of a no-deal Brexit.
The pace of wage rises remains slower than the 4.0 per cent increases seen before the financial crisis.