Rate rise fear as skill shortages push up pay
The prospect of higher rates comes amid evidence that retailers have experienced a poorer than expected Christmas while some economists suggest that bargains in the January sales will be at record levels as shops try to offload unsold stock.
According to figures from the CBI Pay Databank published today, pay awards are now running at an average 3.4 per cent in manufacturing compared with 3 per cent a year ago and in the quarter to August.
In the service sector, deals were averaging 4.4 per cent in the three months to November, compared with 3.9 per cent in the quarters to last August and November 1996.
Around half of British manufacturers report that cost of living increases were an important upward pressure on settlements. One in five pointed to their need to recruit and retain employees - a sign partly of the shortage of information technology specialists.
Kate Barker, chief economist at the CBI, said that the figures would need to be monitored closely because of their potential impact on inflation, but argued that the Bank of England should not be "panicked" into putting up interest rates again.
There were indications that economic growth might be slowing down, so that the most important effect for manufacturers of increasing pay settlements would be lower profits rather than inflation. Increased pressure on margins could feed through into job losses, she warned.
Increasing levels of settlements in service industries largely reflected the buoyancy in the business services sector in a quiet part of the year for pay reviews.
Since August there had been a wide variation in awards, reflecting the different circumstances of individual service firms. Some 14 per cent of settlements were at or below 2.5 per cent; 35 per cent between 2.5 and 3.5 per cent; 21 per cent between 3.5 and 4.5 per cent; 17 per cent between 4.5 and 5.5 per cent and the remaining 13 per cent were above 5.5 per cent.
Liam Neeson's Downton dreams
Thriller is set in the secret world of British espionage
- 1 Mario Balotelli: Staff at arson-hit Manchester Dogs' Home convinced Liverpool striker is behind five-figure donation
- 2 Scottish independence live: Scotland gives a clear 'No' in historic referendum - as it happened
- 3 iOS 8 is full of shiny new features - but it's terrible news for app developers
- 4 Friends 20th anniversary: Six things we wouldn't have without influential comedy series
- 5 Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Scottish independence referendum results: David Cameron pledges plans for 'English votes for English laws' by January
Scottish independence live: Scotland gives a clear 'No' in historic referendum - as it happened
Scottish referendum results: David Cameron set to unveil major devolution of powers to England
Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
Scottish independence: Tory revolt against 'devo max' grows as Rail Minister Claire Perry joins
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
Scottish independence referendum: A nation divided against itself
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Scottish independence: The Queen breaks silence on referendum debate – as think tank warns of £14bn black hole if Scotland votes Yes
Portuguese academic says British are 'filthy, violent and drunk'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...