Average earnings suffer shock fall

August 13, 2014 10:27 am

The Telegraph reports that wage growth suffered a shock collapse between April and June, even as the unemployment rate fell further. Average weekly earnings dropped 0.2pc in the three months, the first fall since 2009, the Office for National Statistics said. The decline compares with inflation at 1.9pc and will make grim reading for the Chancellor and the Bank of England as consumers find their incomes even more stretched as prices outstrip wage growth.

The drop came despite the headline unemployment rate easing back as expected to 6.4pc from 6.5pc, with 2.08m people out of work. This is 132,000 lower than during the previous quarter and 437,000 fewer than in the same period last year. The data highlights the challenge facing the Bank of England which is due to explain in its Inflation Report on Wednesday what the mixed signals from the labour market mean for its thinking on when to raise interest rates.

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