Wages across the UK grew faster than expected over the final three months of last year, but the unemployment rate remained unchanged.
According to the Office for National Statistics, average earnings including bonuses climbed 6.0% in the three months to December, up from 5.5% in the previous month's report. Economists had expected a shallower rise to 5.9%.
Pay excluding bonuses increased from 5.6% to 5.9%, matching forecasts with a third consecutive upward reading, as wages also increased on a real basis when accounting for inflation.
Unemployment remained unchanged at 4.4% in the meantime, the figures showed, undershooting expectations for an increase to 4.5%.
Data also showed a drop in the number of vacancies, a fall in payrolled employees in January and an increase in the unemployment claimant count.
“Today’s figures shows that annual total wage growth remains strong,” National Institute of Economic and Social Research economist Monica George Michail commented, adding that she expects this growth to “moderately slow but remain elevated at 5.2%" for the first quarter.
“Persistent strong wage growth has been causing a headache to the Bank of England, and will likely continue to do so in the next few months, leading the MPC to exercise more caution with regards to interest rate cuts.”
Sanjay Raja, chief UK economist at Deutsche Bank, said the ONS labour market survey (LFS) "paints a slightly better picture of the labour market than we thought", with the jobless rate staying put, employment gains remaining in positive territory and a first positive payrolls reading since October.
He said the LFS data - which the ONS has admitted is far from perfect - shows the jobs market is "creaking but not cracking. Some slack is emerging, but we aren't seeing a worrying spiral in unemployment – just yet."
On wages, he said "some tempering of wage growth is likely over the coming quarters", with pay growth expected to slow further as we get past the April bump from the National Living Wage increase.
"Bottom line, today's surprise gains in LFS employment and HMRC payrolls will give the MPC more time to assess the labour market and demand side of the economy, especially following the upside to Q4-24 GDP we saw last week.
"To be sure, we expect to see more normalisation in the labour market. The rise in employer National Insurance Contributions (NICs) will almost certainly come at a price. And survey data remain consistent with at least a few-tenths increase in the unemployment rate over the coming quarters."