Pay Bulletin in April

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Our Pay Bulletin for April was published last week. It is a monthly comprehensive survey of pay settlements, deferments and pay freezes in over 400 of our member companies. It consists of two main parts: pay trends and inflation trends.

How is pay trending?Pay settlement data in the past few months have displayed a moderately stronger trend, after a long period of broadly stable settlements - see chart below (the blue line climbing!). The figure in March, which includes the biggest pay round so far this year, eased slightly to 2.9% year on year, from an upwardly revised figure of 3.0% in February (which was the largest settlement increase since September 2008).

Source: EEF Pay Bulletin

Echoing our survey, the labour market statistics published by the ONS last week also showed that the rate of pay growth across the economy is progressing. In the three months to February, pay rose by 1.7% year on year across the whole economy and by 3.2% in manufacturing.

And what about inflation?The annual rate of consumer price inflation edged down 0.1 percentage points to 1.6% in March - the lowest rate for more than four years. The downward movement in the rate was mainly driven by transport, with a smaller impact from prices of clothing and furniture & household goods sectors. These were marginally offset by upward contributions from restaurants & hotels and alcohol & tobacco.We expect to see CPI inflation remain close to its current rate for a prolonged period into 2015. As we reported previously, there is little sign of any inflationary pressures from manufacturers, commodities or the supply chain, whilst the comparatively strong pound will continue to push down import costs. The petrol price forecast this summer is broadly flat, with any upward effect on inflation likely to be offset by the feed through of further cuts to domestic energy bills.For a more in-depth insight of the CPI, please refer to Neil's blog from last week.

Here is a little summary of the positive news we share in this monthly publication:

  • EEF three-month average pay settlement getting stronger
  • ONS Average earnings across whole economy AND manufacturing ↑
  • Pay freezes at its lowest level since August 2008
  • Proportion of deferrals ↓
  • Manufacturing productivity saw biggest quarterly rise since 2011q2
  • CPI inflation ↓
  • ∴ Good news for UK manufacturers!

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