Public sector pay continues to fall for the fourth consecutive month according to new figures from the VocaLink Take Home Pay Index released today.

 

The index reveals that public sector take home pay has remained in decline with employees experiencing negative pay growth at -0.1% from the three months to July.

 

However, as take home pay decreases for the public sector, the annual rate of take home pay growth in the UK’s private sector remains largely unchanged from a year on year rate of 2.0% in the three months to July – down just marginally from 2.1% in the three months to the end of June.

 

The ONS estimated GDP growth in Q2 2013 suggests that the economy expanded by 0.6% quarter-on-quarter which is the first time the UK has had two consecutive quarters of positive economic growth since Q3 2011.

 

The appearance of growth across the economy in Q2 suggests that economic activity is on the rise and crucially, all four main industrial groups – agriculture, production, construction and services – increased output over the three months to the end of June.

 

The VocaLink Service Sector Take Home Pay Index has been broadly stable in the three months to July with annual growth at 2.0% as has been the FTSE 350 Take Home Pay Index with annual growth also at 2.0% – further indication of continued spread of confidence within the economy.

 

The appearance of growth in the construction sector in Q2 suggests that households and businesses are more willing to invest in bricks and mortar as a result. Despite pay growth in the manufacturing sector slowing for the second consecutive month to 2.2% from 2.5%, it has still out paced growth in other sectors and figures from the Markit/CIPS manufacturing PMI suggest that the sector is expanding at its fastest rate in over two years.

 

Commenting on this month’s findings, David Yates, Chief Executive Officer at VocaLink said: “While it is encouraging that private sector pay is higher now than at the start of the year, public sector wages continue to fall and all households are feeling the pinch as inflation outstrips pay growth. Although consumer confidence has risen in recent weeks, we still cannot rely on domestic demand to fuel economic growth.”

 

Professor Douglas McWilliams, Executive Chairman of Cebr, said: “The number of people in employment is at a record high, but the cost of this appears to be relatively weak wage growth as reflected in this month’s VocaLink Take Home Pay Index.”

 

For further information and a copy of the report, please visit VocaLink’s website.