Pay and employment hit highs

16 April 2004
Unemployment continues to fall while growth in pay went up faster than it has for almost three years, official data shows.

The Office for National Statistics has revealed that average earnings growth was 4.9 per cent in the three months to February, the steepest rise since August 2001.

On top of this the claimant count, a measure of unemployment, dropped again. It was down 4,200 in March having fallen 5,300 in February.

This means just 2.9 per cent of people are without employment - the lowest since 1975.

However, while falling unemployment and rising wages would seem to be a good sign, economists are predicting this will mean interest rate rises are around the corner.

"Overall the data strongly supports the case for a rate hike at the May 6th Monetary Policy Committee meeting," said Adam Cole, an economist at Credit Agricole Indosuez.

Any increase in interest rates would see pay rises have less effect as variable rate mortgages would become more expensive.