In April, the UK witnessed a notable uptick in starting salaries, marking the fastest growth seen in nearly three years, as reported on Tuesday. This development complicates the Bank of England’s strategy regarding potential interest rate reductions.

Data from Adzuna, a job search platform, indicates that the average salary offered for advertised positions rose to £42,278, reflecting an nearly 9% annual increase—the most significant rise since June 2022. Moreover, there was a modest 0.75% increase in salaries from March to April.

The highest wage growth was observed in Northern Ireland, which experienced a 12.4% increase, while Scotland followed closely with over an 11% rise in advertised salaries. In London, the average offered salary grew by 8.4% over the past year, reaching £48,635.

The ongoing resistance of wage growth against the Bank’s attempts to control inflation through interest rate hikes suggests a continued cautious stance from the central bank regarding future monetary policy adjustments.

At the monetary policy committee (MPC) meeting on May 8, a close vote of 5-4 led to a reduction in borrowing costs by 0.25 percentage points, bringing the rate to 4.25%. Some MPC members expressed concerns over the persistent inflation in wages. Chief economist Huw Pill, who voted to maintain rates, cautioned that the Bank may have lowered rates prematurely.

Additional economic indicators might also dissuade the MPC from pursuing further rate cuts in the latter half of the year. Recent data from the Office for National Statistics (ONS) revealed that inflation surged to 3.5% in April, hitting the highest level since January 2024, rising from 2.6% in March. Retail sales also saw a 1.2% increase in April.

Adzuna reported a slight annual increase of over 1% in job vacancies across the UK, totaling 862,876 in April. However, this figure showed a decline of 0.95% in comparison to March.

“After signs of recovery in March, April has reminded us that the job market remains precarious. Although salary growth stays robust year on year, it appears to be beginning to slow,” noted Andrew Hunter, co-founder of Adzuna.

In the healthcare sector, job vacancies reached their highest level since January of the previous year, highlighting potential labor shortages due to the government’s announcement to halt overseas recruitment of care workers later this year. Conversely, the trade and construction sectors faced the largest drop in vacancies, decreasing by 15.2%.

Sectors experiencing the most significant demand for workers included hospitality and catering, logistics and warehousing, education, and retail.

Adzuna’s findings are consistent with official estimates from the ONS, which reported that job vacancies fell to 761,000 in the three months leading up to April, a decrease from the post-pandemic peak of 1.3 million. Additionally, average wage growth across all employees dipped to 5.6% in the first quarter, down from 5.9% in the previous quarter.