United Kingdom earnings rise at fastest pace in more than six years

During the same period in 2014, the unemployment rate was 6.2% higher.

The figures come as Federal Reserve policy makers gather this week, with economists divided over whether they will raise USA interest rates for the first time in nearly a decade.

The unemployment rate rose in May for the first time since early 2013, raising concerns that a run of strong hiring by British employers had run out of steam and there were signs of a cooling in job creation in Wednesday’s data.

With inflation around zero for most of this year, United Kingdom households are enjoying the first period of sustained real wage growth since the financial crisis.

The surge in pay growth could add to expectations about the time for an interest rate hike nearing, despite inflation now being zero.

Total pay rose 2.9 per cent year-on-year in the three months to July, according to the ONS.

Wages rose by 2.9%, the largest increase since 2009. Adjusted for price changes, wages grew 2.9 percent in the latest three months, the strongest since 2002.

Employment minister Priti Patel welcomed the fact that 80% of people in Britain are employed in the private sector. The employment rate – or proportion of people aged 16 to 64 in work – was 73.5%. There were some signs of softening, with unemployment increasing 10,000 to 1.82 million, while claims for jobless benefits rose 1,200 in August from July.

ONS statistician Nick Palmer said: “Although there has been a small rise in the unemployment level, employment is also up on the previous three months, with its headline rate returning to a record high”.

Wages have picked up faster than the BoE expected earlier this year but a long-awaited improvement in productivity could take some of the inflationary heat out of higher pay.

Chancellor George Osborne said: “It is welcome news that pay packets are rising and jobs are being created”.