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 pace of pay increases within the private sector, which reached its lowest rate in five years.

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, which typically sees increased hiring in these industries. Average wages, excluding bonuses, slowed from a 4.6% rise recorded between August and October.

Public sector workers, in contrast, experienced a surge in wages. The ONS attributed this increase to pay rises being awarded earlier in the year compared to the previous year.

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

The slowdown in private sector pay growth and the decline in payroll numbers raise concerns about the overall health of the UK economy. The Bank of England is closely monitoring wage data as it assesses the need for further interest rate adjustments to combat inflation. The labor market figures provide a mixed picture, with public sector pay rising while private sector employment and wage growth weaken. Future economic data releases will be crucial in determining the long-term impact of these trends.