Industry says pay pressures are easing
Monday 26 April 1999
The latest CBI survey - which contradicted official data showing a pick- up in wage inflation - found that manufacturing pay settlements edged down by 0.1 points to 3 per cent in the three months to March. Settlements in services eased to 3.6 per cent in the three months to March from 4.4 per cent in the previous three months.
Firms in both manufacturing and services said skills shortages, although still a significant factor in pay settlements, had eased in recent months.
Kate Barker, CBI chief economic adviser, said: "This data is further evidence of the lack of inflationary pressures, and should send a clear message to the Bank of England's Monetary Policy Committee as it deliberates its next move on rates."
The survey contradicted the last set of Office for National Statistics earnings figures, which indicated a resurgence of pay pressures, particularly in the services sector. The CBI pointed out that the two sets of figures were not strictly comparable; ONS earnings data include all bonuses, while the CBI's only include changes to bonuses if they are made as an integral part of a pay settlement.
Separate figures yesterday revealed that the number of profits warnings fell in the first quarter, further evidence that the UK economy is on the mend.
Accountancy firm Ernst & Young said there were 118 profits warnings from UK companies in the first quarter of 1999, down from 126 the previous quarter. However, the latest figures were still 35 per cent higher than over the same period in 1998. Among the companies most likely to have issued profit warnings this year were retailers - which accounted for 11 per cent of warnings - manufacturers of computer hardware and chemical firms.
Alan Bloom, National Head of Corporate Recovery at Ernst & Young, said: "While many companies are making optimistic noises, there are still some sectors being hit hard by economic factors outside their control."
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