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BCC: Rise in Wages is Not an Excuse for Early Interest Rate Hike

  • Comparing with a year earlier, earnings for Aug-Oct 2014  including bonuses rose by 1.4%, excluding bonuses rose by 1.6%
  • In the three months (Aug – Oct), employment rose by 115,000 compared with the previous three months, while unemployment fell by 63,000 over the same period
  • The fall in unemployment was a smallest quarterly fall since July-Sep 2013
  • In the three months (Aug – Oct), unemployment rate was 6.0%, compared with 6.2% in previous three months

Commenting on the labour market statistics for November 2014, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:

“The UK labour market remains strong, resilient and flexible. However the decline in unemployment was the smallest in more than a year, indicating a slowdown in the pace of growth. These figures also highlight that pay is now growing faster than inflation. While this is an encouraging development, it would be a mistake to interpret it as an argument for early interest rate rises.

“As earnings growth remains modest and with inflation likely to fall below 1.0% in the short-term, there is no reason to tighten monetary policy. The UK recovery is still facing many obstacles and a premature rate rise would put it at risk.”

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