Wage growth in the United Kingdom slowed to 4.5% between September and November, according to official figures released by the Office for National Statistics (ONS). This deceleration was primarily driven by a significant decrease in the rate of pay increases within the private sector, which reached a five-year low.

The ONS reported that the number of people on company payrolls also declined, falling by 135,000 in the three months leading up to November. This decrease was particularly noticeable in the retail and hospitality sectors, despite the approaching Christmas season, a period typically associated with increased hiring in these industries. Average wages, excluding bonuses, had previously risen by 4.6% between August and October.

While private sector pay growth faltered, public sector wages saw a notable increase. The ONS attributed this rise to pay increases being awarded earlier in the year compared to the previous year.

Sanjay Raja, chief UK economist at Deutsche Bank, characterized the easing of pay growth as "really encouraging" for interest rates. Speaking on the BBC's Today programme, Raja acknowledged the counterintuitive nature of the statement, explaining that "for a Bank of England that's trying" to manage inflation, slower wage growth is a positive sign.

The slowdown in wage growth and the decline in employment figures present a complex picture of the UK economy. While easing wage pressures could potentially alleviate inflationary concerns, the decrease in employment raises concerns about overall economic health and consumer spending. The Bank of England will likely consider these factors as it assesses the need for further adjustments to monetary policy in the coming months.