Manufacturing sets pace for settlements

The latest figures from the LRD Payline database show the first movement in settlements for some time.

The overall median settlement level in the three months to November was 3.3%, up from the 3.0% which had prevailed throughout 2006 until then. Most of this increase was accounted for by the private sector, particularly in manufacturing.

These figures suggest that settlements are belatedly on the rise after a period when they have lagged well behind inflation, but prices are continuing to surge ahead (see below).

Inflation

The retail prices index (RPI) rose by 3.9% in the year to November - up from October's 3.7%, and the highest level since May 1998. The RPI excluding mortgage interest payments (RPIX) is also accelerating: its 3.4% growth in the year to November is the fastest since March 1993.

To complete the set, the consumer prices index (CPI) rose by 2.7% in the year to November - the series' fastest growth since it began in January 1997.

Earnings

The Average Earnings Index rose by 4.3% in the year to October, up from September's 4.1%. Earnings growth in manufacturing (5.3%) continues to outstrip that in services (4.4% ), with the private sector well ahead of the public sector (by 4.5% to 3.2%).

All the above figures refer to earnings including bonuses. If bonuses are excluded, the overall average increase was 4.0%.