The severity of conditions affecting manufacturing was highlighted by our latest pay figures showing an unprecedented fall in the average settlement level for the three months to the end of January. The month of January is crucial as it is when most annual settlements are concluded and for an index which never moves more than point one or two tenths of a percent up or down to fall by almost a full percentage point in one month alone is unheard of.
The fact that deferrals and freezes have also risen sharply however indicates that companies are exploring every avenue in order to avoid lay offs and lose skilled workers. With companies trying every option to keep their people this is sure to add further pressure on government to help by introducing aid for short time working. If this month's figure were not bad enough, the indications from the January figure alone are that there are further falls to come, backing Mervyn King's view of how low are we going to go?
UPDATE:
Detailed data are now available in EEF's February Pay Bulletin...but if you're not a member, the FT provides a headline summary.