by William Schomberg and Andy Bruce

LONDON (Reuters) – Wages in Britain rose at the slowest rate in more than two years in the three months to the end of August and job vacancies fell again, according to official data released on Tuesday which is expected to be welcomed by the Bank of England (BoE) with the prospect of a further reduction in its key rates.

Average weekly earnings, excluding bonuses, rose 4.9% from a year earlier in the three months to the end of August, the Office for Statistics (ONS) said. This rate marks a slowdown compared to the 5.1% increase noted previously and corresponds to the median forecasts of economists polled by Reuters.

The British pound was little changed against the US dollar after the release of this data and investors maintained their bets on a reduction in the BoE key rates next month, with markets counting with an 80% probability of a reduction. a quarter of a point in borrowing costs on November 7 in Great Britain.

The BoE cut rates in August but opted for a pause at the September meeting, saying it wanted to watch for further signs of easing inflationary pressures.

Data due on Wednesday is expected to show Britain’s consumer price index fell to 1.9% in September, below the BoE’s 2% target, even though core inflation is expected remain strong, according to economists polled by Reuters.

“For now, a further cut in interest rates in November seems certain, and we will see how the budget presentation changes the outlook for rates between now and then,” said Luke Bartholomew, an economist at asset manager abrdn.

The presentation of the new Labor government’s first budget, which will set the course for taxing and spending, is scheduled for October 30.

Finance Minister Rachel Reeves on Monday refused to rule out the possibility of a rise in social security contributions paid by employers, leading the opposition Conservative Party to claim an “employment tax” was in preparation.

SIGNS OF COOLING

ONS data in recent months has shown an easing of inflationary pressures in the labor market that developed during and after the COVID-19 pandemic, with employers forced to find and retain their workforce. works by sharply increasing wages.

Excluding bonuses, private sector wage growth – an indicator closely monitored by the BoE – slowed to 4.8% in the three months to the end of August, putting the statistic on track to meet the Bank’s forecast. BoE of an increase of 4.8% for the entire third quarter.

The job market is also now showing signs of cooling, with the estimated number of job vacancies in the UK falling by 34,000 in the three months to September, to 841,000, a level similar to that of before the pandemic.

The unemployment rate, however, fell to 4.0% in the three months preceding August, the lowest rate since the start of the year.

The ONS, however, urges caution regarding its survey on the unemployment rate and employment, which could be subject to revision.

“(External) sources suggest that recent increases in employment measures in the Labor Force Survey are likely to overestimate underlying employment growth,” the ONS writes, adding that unemployment may also have fallen to a lesser extent than the survey figures suggest.

(Report by William Schomberg and Sachin Ravikumar, by Claude Chendjou, edited by Blandine Hénault)

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