Yesterday's labour market statistics released by the ONS will have provided some comfort for the members of the Monetary Policy Committee. Not only were employment figures relatively healthy – indicating that the underlying economic situation could have been stronger in the past few months than GDP data suggests – but growth in average weekly earnings also remained at a low-enough level to stave of fears of a price/wage spiral.
Average weekly earnings growth is some way below the pre-recession average of a little over 4%. Across the whole economy average earnings growth was 2.3% in the three months to March. This was slightly higher than in February, but this can be attributed to increased bonuses in Finance and Business services: when bonuses are excluded, average pay growth actually fell from 2.2% to 2.1% between February and March.
Figure 1: Average weekly earnings growth
On the flipside, the number of hours worked in the economy as a whole fell slightly, over the quarter, despite the numbers of full-time employees rising, and a fall in the number of part-time employees. It could be, then, that pay awards are rising a little more quickly than the headline figures suggest. But, even then, earnings growth is some way from its average levels, and it remains well below CPI.