Adzuna study reports modest rise in average salary for job vacancies while CBI survey shows growth in economic output
The British economy has received a double boost from reports showing signs of modest wage growth and accelerating output from businesses.
According to a study by the jobs search engine Adzuna, the average salary for vacancies advertised online in November was 1.2% higher than the same month a year before – the first annual increase recorded by the website since June 2015. Meanwhile, a survey by the business group the CBI found firms reporting a rise in economic output.
The studies are likely to reassure the Bank of England that the UK can cope with last month’s rise in interest rates – the first in a decade – when the central bank increased the cost of borrowing from 0.25% to 0.5%.
The evidence of pay growth could also help it to raise rates again next year because higher wages could lead to firms hiking the cost of their goods and services to accommodate paying staff more money.
The CBI survey – based on 642 responses across the distribution, manufacturing and service sectors – showed the balance of firms reporting a rise in economic output at +19% in the three months to December, compared with a balance of +6% in the three months to November. Growth was broad-based, with all sectors reporting robust volume growth at a pace above their long-run averages.
However, the lobby group, which represents 190,000 businesses, warned that growth will probably slip to a more moribund pace over the coming months, stalling in the service sector and slowing elsewhere.
Anna Leach, the CBI’s head of economic intelligence, said: “Private-sector firms are enjoying healthy activity levels as we approach the year end, but mediocre expectations for growth underline the ongoing challenges facing companies.”
Adzuna said the average advertised annual salary in November was £32,598 across the UK. It said salaries had increased at a rate of 2.2% from a year before in London to stand at £39,457, while there was a decrease of 12.2% for graduates. Average pay for graduates was £21,814.
However, the growth in wages still trails the consumer price index (CPI) measure of inflation, which rose at an annual rate of 3.1% last month. The Resolution Foundation thinktank said this week that earnings growth when accounting for inflation is expected to be zero over the course of 2018 as a whole, meaning the pressure on living standards is set to continue.
So far, prices have been rising almost entirely as a consequence of the pound’s weakness since the EU referendum in June 2016, due to the higher cost of importing food and fuel to Britain.
While the Bank’s first rate hike last month will help curb further price growth, it still expects the CPI to be above its target rate of 2% over the next three years.
The Bank also believes the growth potential of the economy before prices begin to spiral has been lowered since the Brexit vote, meaning signals of accelerating economic growth could also push up the CPI.