LONDON (Reuters) - Pay awards by British employers are rising by the most in more than two years, according to a survey on Wednesday that suggests the Bank of England’s expectations of higher pay are on track.
Median pay awards rose by an annual 2.5 percent over the three months to January, the strongest growth since the three months to December 2015, research company Incomes Data Research (IDR) said.
“Our latest figures suggest that the pay growth we saw in the private sector in the three months to October 2017 has continued into 2018,” said Ken Mulkearn, editor of IDR Pay Climate.
Last month BoE Chief Economist Andy Haldane said he expected to see the official measure of wage growth pick up from January onwards, likely hitting 3 percent for the first quarter of 2018.
A BoE survey last month also showed that businesses expected to raise pay by an average of 3.1 percent this year - the highest since 2008 - compared with 2.6 percent in 2017’s survey.
The forecast increases in pay growth are a major reason why the BoE said in February that it expected interest rates to rise faster and to a greater extent than they thought a few months previously.
Official wage data covering the November-January period are due at 0930 GMT. The median forecast from a Reuters poll of economists suggests whole-economy pay growth likely picked up to 2.6 percent, from 2.5 percent in the three months to December.
IDR’s survey covered 50 pay settlements from businesses employing almost 330,000 workers. It did not include the public sector - where pay rises tend to be lower - as these public pay reviews tend to take place in April.
Reporting by Andy Bruce, editing by David Milliken