mpc.theyserveforyou.com

mpc: 9 prices persisted. 25 The Committee discussed how long this benign combination of steady and quite rapid employment growth with subdued earnings growth could continue. Some members felt that this welcome development could persist. Overall earnings growth as measured by the AEI had been slowing for five months, regular pay was growing at a steady rate and settlements were steady or falling over the past year taken as a whole. The recent negative contributions from bonuses were not surprising. In financial services, tougher performance targets were likely to have been set for this year than for 1999, when the outlook had seemed less promising; and recent bonus outturns were consistent with the weak performance of the retail sector. To the extent that millennium-related payments had contributed to the sharp movements in earnings growth at the start of this year, temporarily inflating the level of pay, earnings growth in the coming months would be correspondingly reduced. Labour productivity per head was growing at around trend rates, and productivity per hour comfortably above it. The rate of growth of unit labour costs was slower than for several years. It was noted that the projection in the August Inflation Report envisaged higher levels of earnings growth in the coming months, which now seemed less likely. 26 Other members were less sanguine, finding it harder to reconcile the earnings data with other information on the labour market which to them pointed to the possibility of intensifying pay pressures in the months ahead. It was suggested that the low pay settlements earlier in the year had reflected the very low outturns for the RPI in the months leading up to this year's main settlement round and that, since then, the average level of settlements had climbed steadily month by month. The short-term outlook for the RPI suggested that circumstances would be rather different for next year's main pay round. The slowing in the growth of unit labour costs was substantially driven by recent weak bonus outturns, which were unlikely to persist. It was important to remain alert for the first signs of emerging wage pressures and it was in this context that the recent uptick in inflation expectations would - if it was confirmed as more than a temporary reaction to the uncertainties surrounding fuel supplies - be a particular cause for concern.