Wednesday, Jun 3, 2020
International Finance

UK household income from wages grows fastest since 2009

Consumption-driven growth might support the economy during Brexit

Income from wages grew the fastest in a decade this month for households in the UK, a survey by IHS Markit showed today. The financial data firm said that the growth in earnings was the fastest since it started collecting data in 2009.

The faster pace of growth of British household wages might also suggest that consumption-driven growth might be able to hold up the economy as the country faces Brexit. However, the survey also found that consumers were postponing large ticket purchases such as cars and holiday packages.

Markit’s overall wage index growth index, which predicts consumer behaviour, rose to a three month high of 44.0. “Households also moderated their concerns over job security, supporting a more relaxed approach to overall spending,” Joe Hayes, an economist at IHS Markit, was quoted as saying by Reuters.

Meanwhile, the Office of National Statistics data last week showed that employment in the UK reached record high levels in February. The level of employment in the UK increased by 179,000 to a record high of 32.72 million people in the three months to February 2019.

The employment level recorded in February this year was the highest since ONS started keeping records in 1971. Similarly, the unemployment rate remained the lowest since 1975 at 3.9 percent.

Rising employment and falling unemployment have kept the UK job market at its most buoyant levels since the financial crisis of 2008. The UK parliament has time till October 31 to agree to a Brexit deal and minimise the chances of a no-deal Brexit with the European Union.

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