The slower-than-expected deceleration in the UK wage growth supports the case for gradual interest rate cuts by the Bank of England later this year after a quarter-point reduction early this month.
Average earnings excluding bonus climbed 5.4 percent in the three months to June from the previous year, slower than the 5.8 percent rise in the prior period, the Office for National Statistics said Tuesday.
This was the weakest growth since mid-2022 but the growth rate was stronger than economists forecast of 4.6 percent.
At the same time, average earnings including bonuses grew 4.5 percent, weaker than the 5.7 percent increase in the three months to May.
The unemployment rate fell to 4.2 percent in the three months to June period, while it was expected to rise marginally to 4.5 percent from 4.4 percent in the preceding period.
In July, payrolled employees increased 24,000 to 30.4 million. This follows an increase of 14,000 in June.
Vacancies decreased for the 25th consecutive period in the three months to July. The number of vacancies shrunk 26,000 on quarter to 884,000.
Further, data showed that about 100,000 working days were lost because of labor disputes in June. The majority of strikes were in the health and social work sector.
The claimant count increased to 1.801 million in July.
The BoE will pause in September before pressing ahead with two more 25 basis points rate cuts in November and December, Capital Economics economist Ruth Gregory said.
However, much will depend on a broader range of indicators of price pressures, including services CPI inflation.
The ONS is scheduled to issue inflation data on August 14. Consumer price inflation is expected to pick up to 2.3 percent in July from 2.0 percent in the previous month.
ING economist James Smith said the stickiness in wage growth will keep the bank moving cautiously on rate cuts.
But assuming there is further progress on wage growth and services inflation over the next few months the BoE will accelerate the pace of cuts beyond November, the economist added.