Pay Bulletin in February | EEF

Pay Bulletin in February

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Our Pay Bulletin for February was published last week. It is a monthly comprehensive survey of pay settlements, deferrals 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?The figure in January continues the stable level of pay settlements we have seen for over twenty five months. The three-month average pay settlement rose 0.1 percentage point to 2.5% in January. Additionally, both the monthly average and three-month average pay settlements are 0.1 percentage point higher than the annual average pay increase of 2013.

Prefer a graphic? Here is the illustration:

Source: EEF Pay Bulletin

The Labour Statistics published by ONS last week showed a similar (but more moderate in the pay growth) picture. In the three months to December, pay rose by 1.1% across the whole economy and by 2.5% in manufacturing. If you would like more details on the labour market statistics, please refer to Felicity's blog.

And what about inflation?Consumer price inflation fell to 1.9% in January, moving below the target for the first time since late-2009 (the same year of the parliamentary expenses scandal!) The downward movement in the rate was driven mainly by recreational goods & services, furniture & household goods, and alcoholic beverages & tobacco, fairly similar to December.We expect to see inflation rates drop back over the coming months, and to stay within the 1.5%-1.7% range for most of this year. Looking at our forecast, we expect January to mark the beginning of a prolonged period of below target inflation, with the large amount of spare capacity forecast to keep CPI inflation below target for the coming three years.

Here is the most digestible form of all the stats above:

  • EEF Three-month average pay settlement ↑
  • ONS Average earnings ↑
  • Pay freezes at its lowest level since August 2008
  • Proportion of deferrals ↓
  • CPI inflation ↓
  • ∴ A more positive economic picture!


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