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UK Wage Growth Fastest In 11 Years, Jobless Rate Steady At 44-Year Low

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UK wages grew at the fastest pace in 11 years in the quarter to May and the jobless rate held firmly at a 44-year low amid relatively high vacancies, data from the Office for National Statistics showed Tuesday.

In the three months to May, average weekly earnings excluding bonuses climbed 3.6 percent from the previous year, the fastest rate of increase since 2008, and better that the forecast of 3.5 percent.

Likewise, total pay including bonuses grew 3.4 percent, faster than the expected growth of 3.1 percent.

However, the estimated number of vacancies fell by 14,000 to 836,000. The decrease was driven by reductions in manufacturing and information and communication.

The unemployment rate remained unchanged at 3.8 percent in the three months to May, in line with expectations. This was the joint-lowest since the final quarter of 1974.

Largely due to the fall in unemployment among women, total number of unemployed persons decreased by 51,000 on the quarter to 1.29 million.

At the same time, the employment rate fell slightly to 76 percent in the three months to May. Nonetheless, the number of people in work increased by 28,000 on the quarter to a record high of 32.75 million.

In June, the claimant count rate rose to 3.2 percent from 3.1 percent in May. Jobless claims rose by 38,000 from the previous month.

UK wage growth remains the lone hawkish factor for Bank of England, James Smith, an ING economist said.

There are structural reasons to suggest that the trend of rising wages and skill shortages is unlikely to reverse just yet, but the cyclical story is looking a little less encouraging, the economist noted.

Smith does not expect any change in policy from the Bank of England this year.

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