ii comments on the latest ONS labour market overview

Wages are rising at an unprecedented pace - but red-hot inflation prevents workers reaping the full benefits.

Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Wages have risen at an unprecedented pace outside the pandemic period, piling pressure on the Bank of England to up interest rates again next month.

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“But the hottest inflation in almost four decades has prevented many workers from fully reaping the benefits of an income boost. After taking inflation into account, wages total pay (including bonuses) and regular pay both fell by 2.6% on the year as rising prices continued to strip buying power away from households.

“The gulf between the pay rises being handed to public sector workers, and those in the private sector remains sizeable, but it is not as large as previous months. Average regular pay growth for the private sector was 7.2% versus 3.3% in the public sector. The disparity in pay is likely attributed to private sector employers offering stronger bonuses to attract and retain talent in the tightest labour market in years.

“Employment was broadly unchanged from the previous figures, as was the rate of economic inactivity, but Britain's jobless rate rose again, providing further evidence that the red-hot labour market is cooling.

“The post-pandemic hiring sugar rush has shown further signs of abating, with job vacancies falling in the latest three-month period. Job openings have waned in 14 out of 18 industry sectors, suggesting that many employers are reining in their recruitment over concerns of the UK’s economic picture and as high inflation continues to pummel their bottom lines.”