The VocaLink take home pay index shows that growth in take home pay has risen to 3.3 per cent in June from 3.0 per cent in May. This is the reversal of a trend which has seen a continued fall in the index since February 2007.




The VocaLink industry sub-index, which reflects take home pay in the manufacturing sector registered a substantial increase from 3.4 per cent in May to 4.8 per cent in June. This is likely to be a result of second quarter bonuses or redundancy payments artificially boosting the data, as national statistics demonstrate a continued reduction in manufacturing employment.

The VocaLink services sub-index, which reflects take home pay growth in the services sector, continued to decrease from 2.5 percent in May to 2.1 per cent in June.

Richard Cooper, head of marketing and communications at VocaLink, said: "The VocaLink take home pay index shows the growth rate of take home pay increased slightly in June. This was led by a strong rise in the manufacturing sector. An interest rate increase is widely predicted as the housing market shows limited signs of cooling and so household finances will continue to tighten."

Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the take home pay index for VocaLink, said: "Despite subdued earnings inflation a rate rise by the Bank of England is expected tomorrow. A further interest rate hike in November also remains likely, as inflation remains above target and medium term inflationary risks are all on the upside."

VocaLink processes over 90 per cent 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.