Carney's U.K. Wage Puzzle Goes on in Job-Rich, Pay-Poor Economy
- U.K. unemployment rate is at the lowest in more than 40 years
- Low productivity, Brexit uncertainty may be weight on earnings
U.K. unemployment fell to 4.4 percent in the second quarter, the lowest level since 1975. Wage growth topped analysts' estimates at 2.1 percent, but still lagged inflation. Tim Haywood, investment director at GAM Investment, examines the wage data on 'Bloomberg Surveillance.' (Source: Bloomberg)
The lowest unemployment in four decades would normally be unequivocally welcome news, but it’s leaving Mark Carney searching for answers as to why wages aren’t picking up more.
At 4.4 percent, the jobless rate is the lowest since 1975, when Jaws was first in cinemas and Queen released Bohemian Rhapsody. It’s also below the level the Bank of England governor says should start fanning substantial wage gains. While earnings picked up more than forecast in the second quarter, they still lag inflation and are less than half the pace seen in the decade before the financial crisis.