LONDON (Reuters) - Pay awards in British factories held steady at their highest level since mid-2012 in the three months to February, according to an industry survey that added to evidence that wages are rising faster.
Wage growth is both a key indicator for the Bank of England in deciding when to raise interest rates to control inflation and a major political issue, with the opposition Labour Party saying pay has lagged the true living costs of many people.
Thursday's survey from EEF, a leading manufacturing association, showed the average pay settlement in the three months to February was 2.6 percent, matching January's reading which was the highest since July 2012.
"Manufacturing continues to be a driving force and this also reflects in the growth of pay where the sector is outpacing the rest of the economy," said Lee Hopley, chief economist from EEF.
Official data earlier this month showed average weekly earnings in manufacturing, including bonuses, rose 3.2 percent over the three months to January, well above the rate of inflation, which eased to 1.7 percent in February.
Around 2.6 million people worked in manufacturing as of 2011, according to the Office for National Statistics, or around 9 percent of the working population.
A separate survey from the Confederation of British Industry on Thursday showed economic growth slowed in March to an eight-month low, albeit from a record high hit in February.
While BoE policymakers are presenting a united front, wages are likely to be the fault line that splits their views on interest rates.
Economists polled by Reuters expect the Bank will raise interest rates from their record low in the second quarter of 2015.
(Reporting by Andy Bruce; Editing by Ruth Pitchford)
- Politics & Government
- interest rates