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Breaking: Wages Surge Ahead of Inflation, Economic Momentum

Breaking: Wages Surge Ahead of Inflation, Economic Momentum

The recent data showing that average pay growth has surpassed inflation for the first time in nearly two years is a positive sign that the squeeze on living costs may be starting to ease. However, it is important to note that this rise in wages is an average and does not necessarily mean that cost of living pressures are subsiding for everyone. There are still disparities between different sectors, with finance and business services seeing the largest rise in annual pay, followed by the manufacturing sector. Additionally, there continues to be a significant gap between public and private sector pay, with public sector workers experiencing a 6.8% increase in wages compared to an 8% rise for private sector employees.

The rate of inflation, although slowing, remains more than three times higher than the Bank of England’s target of 2%. The Bank of England has been raising interest rates to curb inflation, but it is believed that rates have now hit their peak at 5.25%. However, wage growth is expected to fall only slowly, which may result in interest rates remaining at their peak until late 2024.

The number of job vacancies in the UK has continued to decline, with real estate companies experiencing the sharpest fall in available jobs. Despite this overall decline, the total number of vacancies remains higher than pre-pandemic levels. Some sectors have seen significant average pay growth, while others, such as construction, have not fared as well.

Concerns about wages have been raised by Alex Patrick-Smith, the executive chairman of Ketley Brick, who has faced challenges due to falling demand and increased costs. Despite these difficulties, he is committed to maintaining employment levels and is reluctant to lay off any of his team.

Overall, while the rise in average pay growth surpassing inflation is a positive development, it is important to recognize that there are still challenges and disparities within the labor market.

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