U.K. Wage Growth Picks Up Ahead of Bank of England Meeting — Update

By Ed Frankl

Wage growth in the U.K. rose a little in the three months through August, with unemployment also falling, raising the likelihood that the Bank of England will raise its key rate next month.

Annual weekly earnings growth, excluding bonuses, rose to 3.7%, from an upwardly revised 3.6% in the three months through July. Economists polled last week by The Wall Street Journal had expected 3.6%.

Adding to evidence of a tighter-than-expected labor market, the unemployment rate unexpectedly fell to 4.7% in June-August, from 4.9% in May-July. Economists expected the rate to hold steady.

While inflation has risen in recent months, driven by higher energy costs stemming from the war in the Middle East, policymakers at the BOE have noted that there has been little evidence of those costs increasing demands for higher wages.

The pound gained a little against the dollar after Tuesday's data release. Investors expect the BOE to raise its key rate early next month.

However, annual private-sector earnings growth, closely watched by the BOE, edged only a little higher to 3.0% in the three months through August, meaning it is lower than the rate of inflation.

Vacancies fell by the largest amount since the start of the year, the ONS said. Smaller firms continued to suggest that they might not be recruiting due to increased labor costs, it said.

"These figures likely seal the deal for a November rate rise, by suggesting that current labor-market conditions are not weak enough to bring inflation under control, particularly given the economy's greater-than-expected resilience," said Suren Thiru, economist at the Institute of Chartered Accountants in England and Wales.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

October 20, 2026 02:55 ET (06:55 GMT)