This morning, data from the ONS indicated that UK wage growth stayed at its highest level on record in the three months up to July. On an annualised basis, regular pay excluding bonuses grew by 7.8% to £617 per week despite the labour market showing some signs of slowing down with unemployment ticking up to 4.3%. When including bonuses, pay grew by 8.5% with the ONS citing this total annual growth rate being “affected by the NHS and Civil Service one-off payments made in June and July 2023.”
With headline inflation easing, there has been a departure from falling real wages seen over much of the last couple of years. For example, in real terms total pay including bonuses rose 1.2% on the year and 0.6% for regular pay. While this is welcome news for tens of millions of households
who have real incomes squeezed as mortgages, rent and utility bills soar, it will no doubt raise some concern amongst BoE policy makers alarmed over the prospect of a wage price spiral. Earlier in the year Andrew Bailey and Huw Pill maintained that they were worried that the UK was facing a wage-price spiral and just last month indicated suggested that “both price and wage increase at current levels are not consistent with the inflation target”.
Following this morning’s data, the Chancellor Jeremy Hunt said that “Wage growth remains high, partly reflecting one-off payments to public sector workers, but for real wages to grow sustainably we must stick to our plan to halve inflation.”
The ONS also indicated that there were some 281,000 working days lost due to industrial action in July 2023 with most of the strike action being in the Education and Health and social work sectors. The TUC are currently at loggerheads with the government over Westminster’s powers to enforce minimum service levels during industrial action by public service workers. At the TUC’s annual meeting in Liverpool, Mick Lynch urged members to back the motion of non-compliance with the new law. Here, the motion said that “We have no choice but to build mass opposition to the minimum service levels laws, up to and including a strategy of non-compliance and non-cooperation to make them unworkable, including industrial action.” Given the laws in place, organisations which fail to comply with the government’s minimum service levels could be subject to legal action. With strike action still planned across multiple sectors, all eyes remain on what actions the government may take if non-compliance is taken.
As alluded to, UK unemployment ticked higher to 4.3%, marking the highest level of unemployment since Q3 2021. From the historically low levels of unemployment seen during the course of last year, the uptick suggests the presence of a slowdown in the UK labour market as the BoE continues to tighten monetary conditions. The number of job vacancies also fell 64,000 on the quarter but remains 188,000 up on pre-pandemic levels, an indication that the great-resignation has not been fully reversed and Brexit related labour implications remain.
With Wilko failing to find any buyers or secure a rescue deal, the retailer which has been on British High Street since 1930 will disappear along with 400 shops and 12,500 staff. The news comes after Doug Putman the billionaire owner of HMV’s attempts to keep some 300 Wilko shops open fell through, given rising cost implications. While some reports suggest that B&M may look to take on 51 shops (in a deal worth £13m) and Poundland potentially another 70 shops, 1,016 redundancies have already been announced. Indeed, according to PwC, 52 shops will close their doors for the final time between now and Thursday. As stores start to close, Wilko’s collapse marks the largest British retailer to go under since McColl’s last year (which was eventually recused by Morrisons), with concern remaining for the fate of much of the High Street.
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Macro Monday, report from the BCC on the impact on British businesses from Red Sea disruption, Ukraine president announces number of deaths since the Russian full-scale invasion, and data releases today.
Friday feeling, what's happened in the last two years of the Russia-Ukraine conflict, and more hawkish views from the Fed.
Thought for Thursday, House of Commons ceasefire vote decision, minutes released from Federal Reserve monetary policy meeting, geo-political update in Russia and Gaza, and looking at today's data.
Word of the week Wednesday, data indicates public sector net borrowing in surplus, this afternoons House of Commons vote for a ceasefire in Gaza, and release of FOMC policy me.eting minutes
Travel Tuesday, changes for China's property market, attacks on Red Sea Vessels cause further shipping disruption, EU defensive naval operation launched, and US propose a UN Security Council Resolution in the Middle East.
Macro Monday, update on Israel-Gaza conflict, town in Ukraine in full control of Russian forces, and pressure for creation of more public-private partnerships in the UK from insurers.
Friday Feeling, Labour take comfort in by-election results, potential for income tax cut plans to be dropped, president of European Commission speaks on European Union defence production.
Thought for Thursday, data released this morning shows UK in technical recession, Sunak's pledge for economic growth takes a blow, increasing number of MPs not looking for re-election for the Conservative party, and Labour party lead drops seven percentage points.