Pay slowdown spreads to service sector

The CBI’s databank survey released today found pay awards within the sector increased by just 3.7% for the three months to September, compared with 4.1% in the three months to June, and 3.9% a year ago.

Pay awards were kept low in the service sector because of the inability to increase prices and low profits.

CBI chief economic adviser Ian McCafferty said the ‘fallback in service sector pay indicated that the slowdown was spreading into other areas’.

But he added: ‘This data suggests that there is little pressure on inflation and should reassure the Bank of England.’

Pay awards in manufacturing, a sector already recession, rose slightly to 2.9% but still remained low. In June, the rate was 3.1% for that period.

A similar piece of research undertaken by Incomes Data Services was broadly in agreement with the CBI’s figures.

It said the trend in pay rises was stable, with most salaries increasing between 3% and 4%.


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