While wage growth remains strong, some economists are predicting this will not last.
Yael Selfin, chief economist at KPMG UK, said: “The short-term impact of the rise in labour costs which came into effect in April, will likely put downward pressure on pay over the coming months.”
Meanwhile, recruitment firm Manpower said the whole picture of the labour market will not be fully understood for some time as the effect of Donald Trump’s tariffs spreads.
“We’re seeing much broader scale cutbacks than we’d previously anticipated as higher costs coincide with the Trump-led tariffs and British Steel negotiations, all adding to a greater sense of uncertainty for businesses,” said Anna Spaul, market intelligence director at ManpowerGroup.
The strength in wage growth contrasted with signs of weakness in hiring illustrates the dilemma facing the Bank of England and interest rates which are currently at 4.5%.
Wage growth could delay further rate cuts but the Bank may act to stimulate the economy following the implementation of tariffs in the UK and globally.
The Bank will hold its next interest rate-setting meeting in May.
