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Published: 24/07/2024
The Office for National Statistics (ONS) publishes monthly updates on average weekly earnings across the whole economy and by industry and sector in Great Britain. This commentary relates to ONS’s EARN02 and EARN03 datasets, which cover non-seasonally adjusted earnings, excluding bonuses and including arrears.
Annual growth in construction slower than other sectors
Construction wages, as measured by ONS’s Average Weekly Earnings dataset, increased by 3.8% in the year to May 2024. This was an increase on the 3.2% rise seen in the 12 months to April 2024. On the month, earnings were up by 1.4%.
Across the whole economy, the average increase in wages in the year to May 2024 was 5.2%, which was a 0.3% increase compared with April 2024.
The construction index of non-seasonally adjusted earnings (K5AH) has been lower than the whole economy index (KA5H) since April 2020. Annual growth in earnings has been lower in construction than the whole economy average each month since April 2023.
Source: ONS – Construction (K5AH) and Whole economy (KA5H), non-seasonally adjusted average weekly earnings, excluding bonuses, including arrears
Comparing pay at a sector level (with index K56S), construction workers saw the lowest annual increase in average earnings across all sectors, at 3.8%. The biggest annual increases were seen in the public sector, in finance and business services, and manufacturing.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
The ONS data shows that the construction sector has experienced the most extreme fluctuations in earnings movement in recent years, from a 9.5% annual decrease in May 2020 to a 13.5% increase in May 2021.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
David Crosthwaite, Chief Economist at BCIS, said: ‘It’s perhaps not surprising given the slowdown in demand that construction wage growth is not keeping pace with the rest of the economy.
‘However, we suspect that once demand picks up then above-average wage growth will return and, given expected labour shortages, those increases could be significant and above the long-term average for the sector.’
BCIS produces five-year forecasts of the Average Weekly Earnings construction (K5AH) and whole economy (KA5H) time series for subscribers of BCIS OpX.
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