Take home pay index increases in May
- Index strengthens after four months of decline
- Industry sector pay growth shows increase alongside manufacturing revival
- Healthy pay packets expected to support upward trend in retail sales
6 June 2006: Growth in take home pay rose in May to 4.0 per cent from 3.3 per cent in April, according to the Voca take home pay index . The index had been falling steadily since the start of 2006 after rising to a high of 5.8 per cent in December 2005.
The overall rise was a result of increases in both the industry and services sectors. Take home pay growth in the industry sector increased for the first time this year, returning to trend level alongside the manufacturing revival. The Voca industry index rose from 1.7 per cent in April to 3.1 per cent in May. The Voca services index saw a more modest increase to 4.7 per cent in May from 4.5 per cent in April.
Richard Cooper, head of marketing and development at Voca, commented:
“Growth in real disposable income remains weaker in 2006 than experienced in the second half of last year, but the recovery indicated by this month’s Voca take home pay index marks a return to the upward trend. The strength of take home pay growth underlines the improving outlook for the high street this summer.”
Douglas McWilliams, chief executive of cebr, the economics consultancy which analyses the index for Voca, commented:
“Rises in consumer price inflation combined with strengthening disposable income growth are likely to increase pressure to adjust rates upwards. However, concerns about growth do remain with high oil prices and their secondary effects beginning to bite, making a change unlikely to happen soon.”
Voca processes over 90 per cent of UK salaries and the Voca 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.
To read the full take home pay index report, please click here.