LONDON, Jan 17 ― The pace of pay growth in Britain ― which is being closely watched by the Bank of England as it gauges how much higher to raise interest rates ― picked up more pace in the three months to November, official data showed today.

Pay including bonuses rose by an annual 6.4 per cent in the September-to-November period, the biggest increase since records began in 2001 excluding jumps during the Covid-19 period which were distorted by lockdowns and government support measures.

Pay excluding bonuses also rose by 6.4 per cent, the Office for National Statistics said.

Economists polled by Reuters had expected total pay and the ex-bonuses measure to rise by 6.2 per cent and 6.3 per cent respectively.

The ONS said Britain's unemployment rate held at 3.7 per cent, as expected by most of the economists polled by Reuters, close to its lowest level in almost 50 years.

The Bank of England is worried that the acceleration in pay growth will make Britain's high inflation rate ― currently running above 10 per cent ― harder to bring down.

The BoE is expected to raise interest rates for a tenth time in a row early next month and the main question for investors is the scale of the increase as the British central bank weighs up the risk of a recession with the need to fight inflation.

Financial markets were mostly pricing in a half percentage-point hike in Bank Rate to 4.0 per cent on February 2 but they pointed to a more than one-in-three chance of a smaller 25 basis-point increase.

Sterling rose after today's data and was up by 0.1 per cent on the day against the US dollar and the euro.

The ONS figures showed a wide gap between strong pay growth in the private sector and much weaker increases for public sector workers, many of whom are locked in wage disputes with the government and have carried out a wave of strikes.

Private-sector total pay rose by an annual 7.1 per cent in the three months to November compared with 3.3 per cent in the public sector, the ONS said.

But there were also some signs of a further cooling of the labour market.

Vacancies in the October-to-December period fell for a sixth time in a row and were down on an annual basis - by 85,000 - for only the second time since early 2021 when Britain was under lockdown, the data showed. ― Bernama