Regular pay in real terms, namely adjusted for inflation, increased by 0.9% between July to September 2017 and July to September 2018, according to the UK labour market report from the Office for National Statistics (ONS). This represents the highest pay growth rate since October to December 2016.
Matt Hughes, senior statistician at the ONS, said: “With faster wage growth and more subdued inflation, real earnings have picked up noticeably in the last few months.”
Regular pay in nominal terms, which is not adjusted for price inflation, increased by 3.2% when comparing the same periods, representing an annual growth rate that has not been higher since October to December 2008.
When including bonuses, growth in nominal pay for the same periods was 3%, the highest rate since July to September 2015, while the real-term growth rate of 0.8% is the highest since October to December 2016.
Average regular pay, excluding bonuses, in Great Britain was £493 per week in nominal terms for September 2018, compared with £478 per week a year earlier. Average total pay, including bonuses, in nominal terms was £524 per week, up from £510 for a year earlier.
Unemployment rose by roughly 21,000 in the third quarter of 2018, according to the ONS report, with the rate now standing at 4.1%.
Ian Brinkley, acting chief economist at the CIPD, said: “The underlying state of the labour market remains strong, despite unusually weak employment growth and the consequent small rise in unemployment.
“There was a significant increase in full-time and permanent employment, largely offset by falling self-employment, temporary and part-time work. Regular pay strengthened slightly and, with inflation falling, real pay growth has strengthened significantly.
Brinkley added: “If future employment growth continues to fall short of the increase in job seekers, then further modest rises in unemployment can be expected. Much will depend on whether the current economic and business uncertainty over Brexit and the world economy can be reduced in the coming months. Employers can expect to face continued recruitment and retention pressures and need to prioritise workforce planning.”