UK wage growth is poised to pick up over the coming year, with overall incomes growing for the first time since early 2017, according to the Bank of England’s monthly agents’ survey.
The survey, in which 386 businesses employing a total workforce of around 845,000 people, found that private sector employers expect average pay settlements to come in at around 3.1% in 2018, against 2.6% last year. However, the latter figure was more than the prediction of 2.2% at the start of 2017.
The agents suggested that pay growth was likely to be broad-based, with the biggest increase likely to in consumer services due to many companies employing people on the minimum wage. The construction sector was alone in companies not expecting bigger pay deals this year.
Pay growth would be broad based, the agents wrote, with only construction companies expecting settlements not to accelerate.
Hope for squeezed workers
The survey was published alongside the BoE’s 12 regional agents’ regular monthly report on the state of the UK economy, which found that growth in activity “held steady at a modest pace”.
An increase in mergers and acquisitions, property sales and overseas demand for professional services, helped the UK’s business services sector. Manufacturing exports were buoyed by strong export demand, but both the construction sector and consumer discretionary spending remained weak.
The surveys follow the BoE monetary policy committee’s (MPC) February inflation report, which noted that wage growth picked up in the second half of 2017. The UK inflation rate, which last month held steady at 3%, is expected to start easing over the months ahead, allowing modest growth in real wages for many workers to resume.