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UK jobs market shows recovery signs as wages grow 3.7%, BoE mulls rate hike
Official UK data shows pay growth picking up and payroll numbers rising, bolstering the case for a Bank of England rate hike next month; the finance minister presents his first budget next week.
Why it matters
The Office for National Statistics reported on October 20 that average weekly earnings, excluding bonuses, grew 3.7% in the three months to August compared with the same period a year earlier, above the 3.6% expected in a Reuters poll and extending a gradual pickup since touching a low of 3.4% earlier this year; the July figure was revised up to 3.6%. Private-sector pay growth gathered pace to 3.0% from 2.9%, its first increase since the end of 2024. A preliminary HMRC measure of payrolled employees rose by 13,000 in September, while August was revised to a 1,000 increase from a provisional 26,000 decline. After a run of stronger-than-expected economic growth figures, the data could bolster the case for a Bank of England interest rate hike next month.
Full report
Jack Kennedy, senior economist at jobs website Indeed, said: "The latest figures indicate a labour market showing some resilience, echoing the wider economy's better-than-expected performance." But he added that the labour market is "treading water" and whether it starts swimming depends on the finance minister's budget. John Healey presents his first budget next week; his predecessor Rachel Reeves raised a tax on employers in 2025, which was followed by a fall in hiring.
The data strengthened market bets on a Bank of England hike next month, though the decision will ultimately hinge on coming weeks' inflation and economic data. This site reports verified data and facts only, and does not predict market direction.
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