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UK DATA: Brightmine data point to lower earnings growth than previously expected

UK DATA
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  • Brightmine pay data was published yesterday (seemingly ahead of the scheduled release time of this morning) and showed a meaningful decline in pay settlements across the past two months.
  • Last month's release saw the median pay rise at 4.5%Y/Y in the three months to July but that data has since been revised down to 4.0% - and the data for the 3-months to August has stayed at 4.0%.
  • In fact there appear to be a number of revisions to the prior data. Looking at private sector data (reading from the graph) it appears as though between Jan-Jun readings were around 4.9%Y/Y before falling to 4.8% in July and 4.7%Y/Y in August. Previously private sector pay in both January and February were above 5% and there was no downtick in July.
  • Conversely public sector pay rises have been revised higher for both April and May - and now show a more gradual decline.
  • We are yet to hear back from Brightmine regarding the reason for the revisions, although we do note that the survey size is much larger than previously - now 900k employees with 67 pay awards are covered while in the previous three months 744k employees with 48 pay settlements were covered. Bear in mind that the survey sizes does vary depending on when pay settlements are agreed.
  • Without knowing the reasons for some of these large revisions, it is hard to know how impactful they will be for the MPC - but on the whole this is a positive development and should give more confidence that pay awards are moving in the "right" direction for policy normalisation.
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  • Brightmine pay data was published yesterday (seemingly ahead of the scheduled release time of this morning) and showed a meaningful decline in pay settlements across the past two months.
  • Last month's release saw the median pay rise at 4.5%Y/Y in the three months to July but that data has since been revised down to 4.0% - and the data for the 3-months to August has stayed at 4.0%.
  • In fact there appear to be a number of revisions to the prior data. Looking at private sector data (reading from the graph) it appears as though between Jan-Jun readings were around 4.9%Y/Y before falling to 4.8% in July and 4.7%Y/Y in August. Previously private sector pay in both January and February were above 5% and there was no downtick in July.
  • Conversely public sector pay rises have been revised higher for both April and May - and now show a more gradual decline.
  • We are yet to hear back from Brightmine regarding the reason for the revisions, although we do note that the survey size is much larger than previously - now 900k employees with 67 pay awards are covered while in the previous three months 744k employees with 48 pay settlements were covered. Bear in mind that the survey sizes does vary depending on when pay settlements are agreed.
  • Without knowing the reasons for some of these large revisions, it is hard to know how impactful they will be for the MPC - but on the whole this is a positive development and should give more confidence that pay awards are moving in the "right" direction for policy normalisation.