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mpc: 20 Pay growth had remained subdued, with the mean twelve-month settlement dipping to 3.1% in June and growth in the whole economy average earnings index picking up slightly to 4.3% in May. There was little evidence yet of any `second-round' effects of higher energy prices being passed through into higher wages. On the contrary, as reported by the Bank's regional Agents, firms appeared to have reacted to the squeeze on their profit margins by bearing down on wage (and other) costs. It was also possible that recent downward pressure on wages reflected the more general loosening in labour market conditions during 2005.