Pay rose at its fastest level for more than 11 years over the three months to July, according to the latest employment figures.
The data from the Office for National Statistics (ONS) showed the annual rate of wage growth at 4% – an increase on the 3.8% rate reported last month.
But when the effects of bonuses were stripped out, the figure fell back to 3.8% from 3.9%.
It represents the 18th month in a row that wages have outstripped the pace of inflation – bolstering consumer spending power.
However, businesses and consumers have been cautious with their expenditure in the run-up to Brexit to the extent the economy shrank in the second quarter of the year.
Advertisement
Separate figures from the ONS 24 hours earlier suggested that a rebound for output in July, especially in the powerhouse service sector, had knocked fears of a recession.
The job figures showed unemployment fell by 11,000 to 1.29 million in the three months to July.
It represented a slight recovery on the previous month’s data, which showed the jobless total climbing by more than 30,000.
That upwards move prompted the-then work and pensions secretary Amber Rudd to warn that there were “no guarantees” for employment under a no-deal Brexit scenario.
The jobless rate also returned to 3.8% – its joint lowest level since 1975 – following its rise to 3.9% a month ago.
However, hiring slowed with just 31,000 net new jobs created while vacancies fell.
Tej Parikh, chief economist at the Institute of Directors, said of the data: “At a testing time, the labour market is surpassing expectations, though there are early signs the jobs boom could be cooling down.
“As so many people have entered work, there has been an uplift to household incomes which has helped to keep consumers ticking.
“For a long time, businesses have been eager to expand their workforce despite difficult economic conditions.
“With the supply of available workers shrinking and uncertainty lingering, firms are now beginning to dial down their recruitment ambitions.”
He forecast that vacancies would continue to fall.
But a report by Manpower released on Tuesday suggested otherwise, with firms planning to “stockhire” in the run-up to Brexit to future-proof their organisations from possible no-deal Brexit disruption.
It said of its survey: “In a virtual re-run of behaviour seen at the start of the year – which saw UK employers looking to hire people in response to the original Brexit deadline of March 29th – hiring intentions for the fourth quarter are up two percentage points to +5%, the highest level since the start of the year.”
