LONDON: Britain’s consumer-led recovery should extend into the summer after wage growth jumped above 2% and unemployment fell in March, according to official figures.
The pound jumped more than a cent against the dollar after the news. Analysts said the rise in wages could push the Bank of England to bring forward its first interest rate rise since 2007 to later this year, rather than in 2016.
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But sterling fell back an hour after the unemployment statistics were published due to a downbeat outlook for the British economy by the Bank of England.
The Bank governor, Mark Carney, cut this year’s UK growth outlook and warned that productivity, the main impetus behind higher wages, remained weak.
Markets have expected a rate rise in 2016 after the halving of GDP growth to 0.3% in the first three months of the year. Those investors who considered bringing forward their expectation of a rate rise until this year are likely to sit on their hands as a result of Carney’s comments.
The Office for National Statistics said the unemployment rate fell to 5.5% in the three months to March, down from 5.6% the previous month. The drop of 35,000 in the number of unemployed people took the total to 1.82 million, a seven-year low.
The UK’s unemployment rate is the second-lowest in the EU after Germany, and compares with the highest rates of 25% in Greece and 23% in Spain.
