Pay in Britain is growing more slowly than expected, suggesting the Bank of England will take longer to raise interest rates from their record lows. David Pollard reports.
Glittering times for Britain's economy. A healthy jobs market and vibrant consumer spending making it one of the brighter G7 growth stories. And prompting thoughts a rate hike might soon follow the Fed. Could the latest jobs and pay data put that on hold for a bit longer? Pay growth was 2 per cent in the three months to October. Defying expectations. Commerzbank's Peter Dixon says the UK low-inflation environment is one piece of the puzzle. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "Any form of wage inflation, so long as it's positive, represents quite a chunky real gain, and I think that's one of the reasons why employers are not raising wages at perhaps the pace we envisaged at the start of the year." The Bank of England itself alluded to wages flattening out in its last policy decision minutes. It contrasts with another piece of the monetary jigsaw. Unemployment at a new seven-year low (5.2%). That's better than expected. But perhaps not a good enough argument on its own to raise rates right now. When consumer prices are hardly rising at all. (UK CPI 0.1%) Richard Hunter, Head of Equities, Hargreaves Lansdown. (SOUNDBITE) (English) HARGREAVES LANSDOWN, HEAD OF EQUITIES, RICHARD HUNTER, SAYING: "Inflation needs to kick in before the Bank of England could even consider raising interest rates, so the current view is that probably we're talking about late 2016 and possibly even early 2017 before we see a rate rise in the UK as we're likely to see in the US." That thought has pushed sterling down. The pound touching its lowest level against the dollar in over a week.