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UK pay awards hold at 2.5 percent in busiest month for wage deals - XpertHR

People walk through the financial district of Canary Wharf, London, Britain 28 September 2017. REUTERS/Afolabi Sotunde

LONDON (Reuters) - Major British employers agreed pay rises averaging 2.5 percent last month, offering a more generous increase than in 2017 during the busiest month of the year for wage negotiations, industry data showed on Thursday.

The Bank of England is keeping a close eye on wage growth, which has been slowly increasing this year, as it looks to see whether the economy is strong enough to sustain an interest rate increase later in 2018.

XpertHR, a company that monitors wage deals, said the median pay deal offered by employers in April was 2.5 percent, matching the typical increase offered since the start of 2018 and up from 2.0 percent in April 2017.

"Recruitment and retention pressures, and therefore salaries in competitor organisations, are helping to drive up settlement levels," XpertHR pay and benefits editor Sheila Attwood said.

Two in three employers are offering bigger pay rises this year than in 2017, XpertHR added.

Britain's unemployment rate is at its lowest since 1975, employment rates are at record highs and businesses regularly report difficulty finding staff, especially as immigration from the European Union has slowed since June 2016's Brexit vote.

Some 40 percent of pay deals in Britain take effect in April, normally rising to 60 percent for public-sector employers. XpertHR said pay bargaining in the public sector has been slower to start this year, however.

Chancellor Philip Hammond has loosened public pay restraints for some workers, such as prison guards, nurses and hospital staff. Pay guidance for civil servants and other public-sector employees has yet to be published.

(Reporting by David Milliken; Editing by William Schomberg)