UK Pay Growth Slows Amid Record Employment

Britain's employment level set a fresh record in the three months to May and unemployment was unchanged, yet pay growth eased to its lowest in six months, figures from the Office for National Statistics showed Tuesday.

The number of employment was a record high 32.399 million in the March to May period, rising by 137,000 from the previous three months. Economists had forecast employment growth of 115,000.

The employment rate rose to a record 75.7 percent from 75.6 percent in the three months to April period.

The unemployment rate remained at 4.2 percent, which was the joint lowest since 1975. The figure matched economists' expectations.

Average weekly earnings including bonus, or total pay, grew 2.5 percent year-on-year in the three months to May, which was slower than the 2.6 percent in the previous three months.

Pay growth was in line with economists' predictions and was the weakest since the three months to November, when earnings rose at the same pace.

Excluding bonus, average weekly earnings increased 2.7 percent, a tad slower than the 2.8 percent rise in the previous three-month period, but matched economists' expectations.

ING Bank economist James Smith expects the Bank of England to hike the interest rate in August and hold it unchanged until May next year.

"Despite a slip in UK wage growth, we suspect the Bank of England will remain comfortable with the overall trend," Smith said.

"If Brexit uncertainty picks up as time starts to run out, we think the Bank could have a tricky time hiking rates later this year," the economist added.

A no-deal Brexit would be a "material event" for interest rates as it would have "big economic consequences" for the UK, Bank of England Governor Mark Carney said at a parliamentary hearing on Tuesday.

In its latest macroeconomic projections, the International Monetary Fund lowered the UK growth forecast for this year to 1.4 percent from 1.6 percent. The lender sees growth at 1.5 percent next year.