By Daniel Hunter
The VocaLink Take Home Pay Index shows wage growth across the private sector fell sharply in the three months leading up to October.
The FTSE 350 and Services indices have both seen the lowest levels of growth in 2012 whilst the manufacturing sector sees take home pay contract for a second consecutive month.
In the three months leading to October, the FTSE 350 Take Home Pay Index dropped to 0.6% and the services index dropped to just 0.7% growth, the lowest rating for both indices since March 2011.
The VocaLink Manufacturing Index has contracted by 0.4% and now sits at -0.7%. The slowdown in wage growth in the manufacturing sector represents a spectacular five month decline from the four year high of 4.5% seen in June 2012.
The VocaLink Public Sector Index remains consistent, as take home pay growth stands at 0.6% for the three months to October. The impact of industry-wide pay freezes among public sector workers is contributing to keeping take home pay growth at subdued levels.
Commenting on this month’s findings, David Yates, Chief Executive Officer at VocaLink, said: “There is a decline of take home pay growth amongst the private sector despite the UK exiting recession in October. With the annual take home pay growth well behind the rate of inflation in all sectors, UK households will continue to be impacted by the fragile state of the economy, especially in the run up to Christmas.”
Douglas McWilliams, Chief Executive of economics consultancy Cebr, said:
“The latest VocaLink Take Home Pay Index suggests that underlying growth in the economy is weak and business confidence remains at a low ebb, as firms remain cautious about making new permanent hires. Statistics show that employment is faring relatively well of late however this is thanks in part to an increase in temporary work. The opportunity for employers to choose part time workers over full time continues to apply downward pressure on wage growth.”
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