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Bullish Price Sequence

By David Robinson
     LONDON (MNI) - The Bank of England agents fourth quarter report found
recruitment difficulties but that employers, faced with higher input costs, were
expecting to agree only moderately higher pay settlement in 2018.
     The agents report said that a significant number of employers "expected pay
awards to edge up a little towards 2.5%-3.5% over the next year, from 2%-3% in
2017" with some employers offering improved non-pay benefits to try and get
around recruitment difficulties.
     The Q4 survey found that recruitment difficulties had become more
widespread across sectors and skill levels with some employers who relied on
seasonal workers, in sectors such as agriculture, finding that these workers
were less inclined to travel to the UK due to Brexit uncertainty and sterling
     "There had been a small number of reports of companies increasing EU
workers' wages partly to offset the impact of weaker sterling on repatriated
pay, but contacts were more likely to have enhanced non-pay benefits, such as
subsidised accommodation," the report said.
     The broad picture of a modest pick-up in wage growth supports the Monetary
Policy Committee's assumption in the November Inflation Report that earnings
growth will rise somewhat. The agents also noted that employers were facing
higher input costs due to a combination of rising global market prices and
sterling weakness.
     The BOE's quarterly Decision Maker Panel survey, a comprehensive review of
business views on the impact of the withdrawal from the European Union, found
the chief financial officers (CFOs) expected some weakening in sales growth over
the next year, with annual sales growth falling to 3.7% in Q3 2018 compared to
5.7% in 2017.
     Employment growth was expected to grow more slowly, with wages expected to
rise by 2.5%, at the bottom end of the agents scale.
     Brexit was largely not seen as a driver of wage growth, with just over half
of panel members saying that Brexit would have no material impact on wage
setting and the remainder divided over whether it would push up or down on pay.
     Brexit overall was expected to be markedly more likely to hit sales than
boost them, with CFOs putting an average 45% probability on a negative impact on
sales and 18% forecasting a positive effect.
--MNI London Bureau; tel: +44 203-586-2223; email:
--MNI London Bureau; +44 203-586-2226; email:
[TOPICS: MABDS$,M$B$$$,M$E$$$,M$$BE$]