LONDON (Reuters) - British labor costs have been growing more strongly than previously announced, the country’s statistics office said on Monday, adding to the case for a first interest rate hike by the Bank of England.
The Office for National Statistics (ONS) said it made an error in its original calculations and that growth in unit labor costs - the cost to employers to produce a given amount of output - stood at an annual 2.4 percent in the second quarter, not 1.6 percent as reported on Friday.
That earlier estimate failed to take into account a recent broad revision of how Britain’s economy has fared in recent years, including higher income reported by self-employed people.
While the revised growth in unit labor costs was the slowest since the first three months of 2016, the increase compared with Friday’s estimate would help officials at the BoE who want to raise interest rates now, an economist said.
“On the margins, this reinforces the view that the Bank of England might see problems up the line with domestically generated inflation,” said Victoria Clarke, an economist with bank Investec.
British government bond prices fell slightly on Monday while prices of equivalent German bonds rose.
Most economists polled by Reuters last month said they thought the BoE would announce on Nov. 2 that it was raising interest rates for the first time in more than a decade.
The BoE said on Sept. 14 that most members of its Monetary Policy Committee thought it was likely that a hike would be needed “in the coming months” if inflationary pressure continued to build.
Writing by William Schomberg; editing by Gareth Jones