Results continue to vary between sectors. The service sub-index has seen an unusual spike of 0.6% in take home pay. While this is the strongest figure for six months, it still remains well below the recent peak of 4.9% in February. The increase in October suggests that so far the credit crunch has not affected financial and services firms as severely as expected.
September's sharp 1.0% dip in take home pay for the manufacturing sector has levelled out. This mirrors findings from the Office for National Statistics for the third quarter of 2007, which shows that the manufacturing sector struggled, with output expanding by just 0.2% from the previous quarter. Over this period the VocaLink industry index has declined by over a third, from 4.8% in June to a six month low of 3.0%.
"Despite this month's increase in take home pay, annual wage growth is well below 2006 levels" says Richard Cooper, head of marketing and communications at VocaLink. "If, as predicted interest rates remain unchanged, this could help ease the pressure for consumers, who face increasing prices on essential goods like petrol."
Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the take home pay index for VocaLink, said: "When you look at the long-term trends, 2007 has been particularly weak for wage growth. In October 2006, seven of the previous ten months achieved growth above 4.0% whereas this year take home pay has only exceeded this level in a single month."
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.
