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If we’ve been struggling to sleep for the past few weeks, it’s probably because of this MainFT story from 25 March:
An unnamed large employer’s late supply of earnings information to the UK statistics agency risks skewing the country’s main official measure of wage growth, raising doubts about data that guides monetary policy.
The intervening period has seen a surge in global market instability, no doubt due to traders’ uncertainty about who the mystery business upsetting the UK’s average weekly earnings could be, and what impact the revisions might have:
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Despite these ructions, we didn’t see much sell-side speculation. Bruna Skarica from Morgan Stanley was one of the few to put her head above the parapet, writing last week:
It is hard to think of a single business which could move the numbers meaningfully, barring perhaps NHS England. Should revisions pertain to the NHS, they would show up in public sector and whole economy data.
Well, we have a new load of labour market data, and something of an answer.
And no, it’s not NHS England. Instead, it’s a major retailer. Or an exceptionally large repair company.
The ONS, naturally, is tight-lipped about the identity of this “one business”, and declined to offer more details to FT Alphaville. Can the data offer a clue?
Quoth the ONS:
As noted in the previous bulletin, we were working, as an exception, on opening up revisions further back in time than usual to allow for late and updated returns we received from one business to be included. We have now concluded this work and, as part of this release, we have revised the estimates back to October 2020 to improve the quality of our estimates.…
At the whole economy level, the revisions are generally small and within the range we see during seasonal adjustment reviews. As expected, as the estimates are broken down below the whole economy level, the revisions become larger. The largest revisions are seen in the wholesaling, retailing, hotels and restaurants sector and the retail trade and repairs industry, which warranted the exceptional revisions to be implemented.
They add, channelling Morrissey:
Some periods see bigger revisions than others.
Despite this, the ONS seems a bit shy to show just how acute those revisions are. The section of today’s AWE release covering the adjustments includes a whole economy view…
…a private-sector view…
…and a wholesaling, retailing, hotels and restaurants sector view…
…but pulls up just short of giving us a chart for the most granular (and therefore juicy) level, instead supplying only words:
The retail trade and repairs industry showed the largest revisions. The largest revisions were for the periods between the three months to November 2021 to May 2022, when the revisions were between 1.5 to 3.4 percentage points and more recently from the three months to July 2024 to September 2024, when they were around 2.1 percentage points.
To get our chart on, we had to go to X04: Average Weekly Earnings Supplementary Analysis, a spreadsheet released alongside today’s release. That spreadsheet has specific monthly AWE figures for before and after the revisions. Here’s how they looks (NB unlike the other charts above, these figures are not seasonally adjusted):
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It’s a pretty big jump once we get down to this level. May 2024 is particularly notable — retail and repair AWE that week were 28.7 per cent higher than the ONS previously thought.
The gap, as you might guess from the shape of the line above the pink line above, appears to be in large part down to a one-off bonus: the ONS’s revisions put retail and repairs AWE £19 higher than month, and ascribe £17 of that jump to bonuses:
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So, what do we know?
— one business
— retail or repair
— above-average pay (given it pulled up the whole series)
— big, like shift-the-whole-series big
— paid out a substantial bonus in May 2024
And since we’re a blog, we can idly speculate.
Last April, the UK’s supermarket, Tesco — one of the UK’s biggest private-sector employers — announced a £70mn bonus scheme for its 220,000 staff.
According to a post on the Tesco subreddit, this took the form of a “one-off payment of 1.5% of eligible earnings for hourly staff in UK stores, CFCs, UFCs, CEC and distribution”, that landed in Tesco employees’ May pay packet.
So if we had to bet, it’d be Tesco. If you have a better guess, let us know in the usual ways.
