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U.K. wages still surging
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October 13, 1999: 7:18 a.m. ET
Markets on rate watch after wage growth outstrips forecast; job growth continues
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LONDON (CNNfn) - U.K. average earnings surged 4.9 percent in the three months ending Aug. 31, according to official data released Wednesday, putting financial markets back on an interest rate alert.
While unemployment numbers also released by the Office of National Statistics revealed that joblessness had fallen to a 19-year low in September, the wage data canceled out the buoyancy created by benign inflation data released Tuesday.
Unemployment fell by 5,400 to 1.21 million, leaving the jobless rate at 4.2 percent.
While the wage data were treated with some caution because of a change in the treatment of bonuses since last year, most economists expressed negative reaction to the headline number. It surpassed the consensus estimate of 4.7 percent and compared with a 4.6 percent rise in the previous three months.
Economists were alarmed by the figures, and their potential to influence a hike in interest rates. "These are quite bad numbers," said Phyllis Reed, chief international bond strategist at Barclays Capital in London.
The Bank of England has identified strong earnings growth as one of the key factors in its decision to raise U.K. interest rates by a quarter-point to 5.25 percent last month. While the bank left rates unchanged at its meeting on Oct. 9, many analysts expect it to push through another raise before the end of the year.
Financial markets appeared to take the earnings number in stride as U.K. bond prices actually firmed and the yield decreased slightly to 5.74 percent. Sterling rose to $1.6593. 
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