Commenting on the ONS Labour Market data published today, Rachel Lund, Head of Retail Insight & Analytics from the BRC said:
"While there are signs that the rate of job creation is now slowing, with total numbers employed falling in Q3 from Q2, the unemployment rate held at a record low of 4.3 per cent.
"However, more important to consumer spending is pay growth, which still shows little sign of keeping up with inflation. The 2.2 per cent earnings growth in the three months to September still leaves UK households wages falling in real terms. That means budgets in the run up to the festive period will be stretched and retailers will have little choice but to compete harder in what is already one of the most competitive markets in the world.
"The lack of wage growth is a concern for both retail and the UK economy. The Bank of England and other forecasters, have consistently expected an imminent pick up in wage growth and been disappointed. This time last year the Bank expected growth to reach 2.75 per cent by the end of the year, two years ago they expected it to be four per cent, they now expect just 2.25 per cent. Even the relatively sober picture for the outlook for the UK economy is predicated on a pick up in wage growth next year.
"While reports by the Bank’s agents suggest higher pay growth might be in the pipeline, however if activity doesn’t pick up businesses may not be in a position to put those pay increases in place. So we urge the Chancellor to do all he can next week to support UK consumers with a budget for shoppers."
Total pay growth and Bank of England projections
Source: ONS, Bank of England