Growth in average weekly earnings rose to 5.6 per cent in the three months to November 2024 (for both total and regular pay).
We forecast total pay growth to slow to 4.6 in Q1 of 2025.
With inflation falling, annual growth in real regular pay remains strong at 2.5 per cent, meaning workers will see a continued recovery in their standard of living.
Unemployment slightly rose to 4.4 per cent. However, it is worth nothing that LFS data remain volatile and therefore should be treated with caution.
We forecast unemployment to remain above the 4 per cent mark through the coming months but remain below its natural rate.
As vacancies continue to fall, the vacancy-to-unemployment ratio has reached pre-pandemic levels, which is expected to lead to a reduction in wage pressures.
While growth in services sector wages has notably fallen in recent months, it remains strong at 5.4 per cent in the three months to November.