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- May 15, 2018
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British employers hired many more workers than expected in early 2018 but wage growth has yet to accelerate sharply, according to figures that leave the Bank of England still waiting for signs the economy is ready for a rise in interest rates.
Employment rose by 197K during the first three months of this year, the biggest jump since late 2015 and far exceeding the 130K expectation in a recent poll of economists.
Annual growth in earnings, excluding bonuses, edged up to 2.9 percent in the three months to March after a 2.8 percent rise in February, the Office for National Statistics (ONS) said, as expected in a poll.
While this was the biggest increase since the three months to August 2015, it represented only a 0.4 percent increase in pay in inflation-adjusted terms.
Including bonuses, total pay growth cooled to 2.6 percent from 2.8 percent in the three months to February, as expected.
Last week the BoE left interest rates on hold, despite saying in February that borrowing costs were likely to go up more quickly than it had previously thought. It said it wanted to be sure the economy was bouncing back after barely growing in the first quarter.
Economists said the strength of hiring in today’s figures suggested Britain’s economy did not have such a bad start to 2018 as portrayed by the preliminary official data.
On balance, the combination of robust employment growth, falling unemployment, and stronger underlying earnings growth — looks supportive to a Bank of England interest rate hike in August.
Less than a year before Britain is due to exit the European Union, the ONS said the number of EU nationals employed in Britain fell by 1.2 percent from a year ago to 2.292 million — the biggest drop in percentage terms for eight years.