UK wage growth moderated to 3.5% year-on-year in the second quarter, official payroll data showed on Tuesday, marking a slight deceleration from the prior month.
Average weekly earnings excluding bonuses increased by 3.5% in June, compared with a revised 3.6% gain in May, according to the Office for National Statistics. The reading fell short of economists' expectations, which had anticipated a 3.7% increase.
The data suggests a gradual cooling in labor market pressures, though wage growth remains elevated by historical standards. The unemployment rate held steady at 4.0% in the three months to May, while vacancies fell for a 24th consecutive month, indicating a softening in demand for workers.
The Bank of England has cited strong wage growth as a key factor in its decision to maintain higher interest rates to curb inflation. Policymakers remain cautious about the risk of persistent inflationary pressures from the labor market, even as broader economic activity shows signs of slowing.
The latest figures underscore the BoE’s challenge in balancing inflation control with economic stability, as wage growth continues to outpace productivity gains.
