- Service Sector Falls to 3.3%
- Manufacturing Sector Hits Lowest Level Since March
The 0.4% decline in the service sector sub-index means that the VocaLink services index is currently tracking below the level of the Office for National Statistics average earnings index, suggesting leaner times ahead in the run up to Christmas. However, we have not yet seen a significant impact from the credit crunch on service sector wages. In June 2007 the VocaLink services index stood at 2.1% and has continued to rise, albeit erratically, even as the effects of the crunch have been felt.
The manufacturing sector fell to 2.9%, its lowest level since March. The continued rise of the pound against the dollar is making UK manufacturers less competitive against Chinese and US competitors. Conversely the pound has weakened against the euro which should boost trade exports to the continent.
Richard Cooper, head of brand and communications at VocaLink said "The VocaLink take home pay index has shown that salary growth has been modest throughout 2007, averaging just 3.5%. So far consumer spending has remained strong. However with signs of a weaker housing market, falling consumer confidence and the decline in take home pay growth, it will be very interesting to see if the trends that indicate a low spend Christmas for consumers are substantiated."
Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the take home pay index for VocaLink, said: "The 2007 annual wage growth averages out at 0.7% lower than 2006 levels despite increases in interest rates, fuel prices and inflation of other costs of living throughout the year."
VocaLink processes over 90% of UK salaries and the VocaLink take home pay index is the most timely and accurate disposable income data available in the UK. It is based on actual payments made to employees on a three-month moving average compared with the same measure a year earlier. It is affected by changes in tax rates, National Insurance and other employer payments or deductions.
