According to figures by the Office for National Statistics (ONS) wage growth has slowed to the lowest level in more than a year which is still outpacing inflation.
Regular pay growth minus bonuses dropped to 6.2% in the quarter to December, this is the slowest growth in the three months to October 2022.
Taking the Consumer Prices Index (CPI) inflation into account regular wages was up by 1.9% since 2019 due to inflation having fell sharply.
Jake Finney, an economist at PwC UK, said: “The lingering concern for the Bank of England will be that the labour market has not cooled sufficiently to achieve a sustainable return to the 2% inflation target.”
Liz McKeown, director of economic statistics at the ONS, said: “It is clear that growth in employment has slowed over the past year.
“Over the same period, the proportion of people neither working nor looking for work has risen, with historically high numbers of people saying they are long-term sick.”
Chancellor Jeremy Hunt said, “It’s good news that real wages are on the up for the sixth month in a row and unemployment remains low, but the job isn’t done.
“Our tax cuts are part of a plan to get people back to work so we can grow the economy – but we must stick with it.”
Samuel Tombs at Pantheon Macroeconomics warned that the official unemployment figures did not give an accurate picture of the UK’s jobs market.
He said: “The official unemployment rate gives a misleading impression of labour market tightness and we think the Monetary Policy Committee will place less weight than usual on it.
“The path to lower interest rates, therefore, remains clear, though it hangs in the balance whether the first cut will come before the end of the second quarter.”