Wage growth dip averts rate rise

WAGE growth in Britain stumbled over the last three months postponing once again the need for the Bank of England to follow America’s Federal Reserve by raising interest rates.

At the same time latest US data, on inflation and new house building, suggests that the Fed may have moved prematurely when it raised its key interest rate to 0.5pc in December.

In the UK, earnings levels, including bonuses, slipped to 2pc from 2.4pc, over the last three months – a surprise given the strength of the jobs market.

At 5.1pc of the workforce and falling the UK’s unemployment rate is now back to levels last seen at the peak of the Blair-Brown boom in 2006, just before the financial crisis hit.

Encouragingly for the Chancellor George Osborne, as he plans for his March budget, the claimant count of employment – the number of people receiving benefit – fell by 4,300 people in December after several months of rising figures.

Many economists regard this number as an important indicator of the future with a 5pc jobless rate now in sight.

The job numbers were welcomed by the sometimes critical British Chambers of Commerce which said it was a tribute to Britain’s ‘vibrant and dynamic labour market at a time of major economic uncertainty’.

One group being left behind by the recovery are Britain’s youth, the 18-25 year olds, among whom the unemployment rate stands at a hefty 13.7pc.

In the US the main factor pushing consumer price inflation down by 0.1pc in December was lower petrol prices.

The year-on-year inflation rate crept up to 0.7pc from 0.5pc but is expected to remain at or around 1pc for most of 2016.

One sign that the American economy is coming off the boil was a 2.5pc drop in housing starts and permits in December - even though it was the ninth straight month when over a million new homes were begun.