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UK private regular wage growth shows big drop in single month figures

UK DATA
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  • Looking in more detail at the private sector regular wage data, there was quite a soft single month print for May (with only negligible revisions to prior months).
  • This put the single month figure at 4.9%Y/Y in May (it has been 5.8-5.9% between January and April this year).
  • In fact looking at the growth in pay for this cohort versus 3 months ago there is only a 1.6% increase - this compares to a 2.2% increase seen last month for the April vs January (previous cohort) and is more in line with the 1.5% increase seen in the March cohort (vs December),
  • We noted last month that there were bigger increases in finance and manufacturing - sectors that should be less impacted by NLW increases than "wholesaling, retailing, hotels and restaurants" - this trend continued. Indeed, the single month for the latter category only rose 4.2%Y/Y, down from 6.1%Y/Y last month. This category is also arguably one of the most important for cost pass through.
  • So overall, we would note that there is a welcome slowdown in the wage data here - in line with consensus expectations, but a bigger slowdown than we would have expected.
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  • Looking in more detail at the private sector regular wage data, there was quite a soft single month print for May (with only negligible revisions to prior months).
  • This put the single month figure at 4.9%Y/Y in May (it has been 5.8-5.9% between January and April this year).
  • In fact looking at the growth in pay for this cohort versus 3 months ago there is only a 1.6% increase - this compares to a 2.2% increase seen last month for the April vs January (previous cohort) and is more in line with the 1.5% increase seen in the March cohort (vs December),
  • We noted last month that there were bigger increases in finance and manufacturing - sectors that should be less impacted by NLW increases than "wholesaling, retailing, hotels and restaurants" - this trend continued. Indeed, the single month for the latter category only rose 4.2%Y/Y, down from 6.1%Y/Y last month. This category is also arguably one of the most important for cost pass through.
  • So overall, we would note that there is a welcome slowdown in the wage data here - in line with consensus expectations, but a bigger slowdown than we would have expected.