Wage growth in the UK slowed to 4.5% between September and November, according to official figures released by the Office for National Statistics (ONS), driven by a significant deceleration in private sector pay increases. The ONS reported that the pace of pay growth for private businesses reached its lowest level in five years. Simultaneously, the number of people on company payrolls decreased by 135,000 in the three months leading up to November, with notable declines observed in the retail and hospitality sectors.

The slowdown in average wages, excluding bonuses, represents a decrease from the 4.6% rise recorded between August and October. Public sector workers, in contrast, experienced wage increases, which the ONS attributed to pay rises being awarded earlier in the year compared to the previous year. The decline in payroll numbers occurred despite the approach of the Christmas season, a period typically associated with increased hiring in retail and hospitality.

Sanjay Raja, chief UK economist at Deutsche Bank, characterized the easing pay growth as "really encouraging" in the context of potential future interest rate cuts. Speaking on the BBC's Today programme, Raja acknowledged the counterintuitive nature of the statement, saying, "I know this sounds odd when we say lower pay growth is a good thing."

The data released by the ONS provides a snapshot of the UK labor market amid ongoing economic uncertainty. The slowdown in private sector wage growth could be interpreted as a sign of cooling inflationary pressures, potentially influencing the Bank of England's monetary policy decisions. The decrease in payroll numbers, particularly in sectors like retail and hospitality, raises concerns about the overall health of the economy and the impact of cost-of-living pressures on consumer spending. The coming months will be crucial in determining whether these trends persist and what implications they hold for the broader economic outlook.