LONDON (Reuters) - Underlying momentum in British workers' pay may have been even stronger in early 2024 than shown by official data, according to analysis published by the Bank of England on Thursday.
Rapid pay growth is a key concern stopping the BoE from cutting interest rates from a 16-year high of 5.25%, despite inflation returning to its 2% target in May.
Official data shows average weekly earnings between February and April were 5.9% higher than a year earlier, down from a peak of 8.5% in mid-2023 but still around double the rate most BoE policymakers think is consistent with 2% inflation.
Growth in wages excluding bonuses, which strips out some volatility, fell to 6.0% from 7.9% over the same period.
However, the new research calculated a measure of the underlying trend in wage growth which aims to strip out more of the temporary volatility from the data.
This new measure showed pay growth was around 6.5% in the first quarter of 2024. Unlike the official data, this measure has risen since late 2023 when it was just under 6% and has fallen less from a 2022 peak.
Tomas Key, the BoE economist behind the calculations, said there was "considerable uncertainty" about the exact level of underlying wage growth.
But, like the official series, it clearly showed wage growth was far above pre-pandemic rates.
The research represents Key's own views, and is not necessarily shared by BoE or its rate-setters.
He took official quarterly wage data for 24 sectors across the economy, analysed them individually to strip out temporary volatility and combined them to produce an estimate for the economy as a whole.
(Editing by William Schomberg)
By David Milliken
