Employment and wages proceed to extend however ‘so will interest rates’

Homeowners were warned to expect more interest rate rises after figures out yesterday raised fears inflation will stay high.

Wages have surged at their fastest rate outside of the pandemic, soaring by 7.2 percent in the three months to April – up from 6.8 percent in the three months to March.

Yet pay continues to be outstripped by rocketing prices, with regular wages down 2.3 percent when inflation is taken into account. Unemployment fell as those in work soared past ­pre-Covid levels for the first time to a record high.

The UK jobless rate dipped to 3.8 percent in the three months to April from 3.9 percent in the previous quarter, easing fears of a looming recession.

But there were also some worrying signs for the employment sector, with vacancies falling for the eleventh time in a row and another record high for those off work due to long-term sickness. And the jump in wages and jobs is almost certain to force the Bank of England into another rate rise when the Monetary Policy Committee meets next Thursday.

Yields on two-year dated UK Government bonds – a key financial indicator used to set mortgages – went even higher yesterday than those ­following September’s ­shambolic mini-budget below Liz Truss. Investors had been betting the Bank of England is definite to lift the bottom charge subsequent week above 4.5 p.c.

The Resolution Foundation stated a return to real-term wage progress was on the best way as inflationcontinues to fall.

Hannah Slaughter, senior ­economist on the suppose tank, stated: “Record pay growth across Britain means our 18-month run of falling real wages may have ended.

“But, while this is welcome news for ­workers, it will worry the Bank of England and anyone looking to remortgage, as it adds to the case for raising interest rates for longer.”

Samuel Tombs, at Pantheon Macroeconomics, stated the figures ­recommend “wage growth has far too much momentum for the Monetary Policy Committee to stop ­hiking the Bank Rate yet”. And he warned that the financial traits fanned “the ­impression that the UK has a unique problem with ingrained high inflation”.

Mr Tombs added: “We think ­year-over-year growth in average weekly wages will slow to about five percent by the end of this year, on course for 3.5 percent in 2024. We remain unconvinced, therefore, that the MPC will need to increase Bank Rate all the way to 5.5 percent by the end of this year, as markets expect. A five percent peak still looks more likely to us.”

Chancellor Jeremy Hunt stated: “The number of people in work has reached a record high, and the IMF (International Monetary Fund) and OECD (Organisation for Economic Co-operation and Development) recently credited our major reforms at the Budget which will help even more back into work while growing the economy.

“But rising prices are continuing to eat into pay cheques – so we must stick to our plan to halve ­inflation this year to boost living standards.”

The ONS stated the employment charge rose to 76 p.c within the newest quarter, edging up from 75.9 p.c within the earlier three months.The variety of folks in jobs is at an all-time excessive of 33.1 million, up 250,000 quarter on quarter as extra folks returned to the workforce.

More well timed knowledge estimated the variety of workers on payrolls rose by 23,000, or 0.1 p.c, ­throughout May to 30 million, whereas the ONS revised away final month’s ­shock fall, with knowledge now displaying a rise of seven,000 in April.

Darren Morgan, of the ONS, stated: “With another rise in employment, the number of people in work overall has gone past its pre-pandemic level for the first time, setting a new record high, as have total hours worked. The biggest driver in recent jobs growth is health and social care, followed by ­hospitality.

“While there has been another drop in the number neither working nor looking for work, which is now falling right across the age range, those outside the jobs ­market due to long-term sickness ­continues to rise, to a new record.” The quantity off long-term sick reached one other excessive of two.6 million within the three months to April.