Promising new figures, released earlier this week, show that average earnings in the UK are growing at the fastest rate for six years.
In the three months between May and July, average earnings – not including bonuses – rose by 2.9 per cent when compared with the same period 12 months earlier.
Although the good news was somewhat tempered by a slight increase in unemployment.
The figures from the Office for National Statistics (ONS) showed that there were 1.82million people out of work – 10,000 more than in the previous quarter.
However, Chris Williamson, chief economist at Markit, said overall there was plenty of reason to feel positive about the UK’s present economic position.
“The long-awaited upturn in pay, which has been the missing element of the UK’s economic recovery, looks to be finally upon us, reviving the prospect of a rate hike by the end of the year,” he told BBC News.
“Strip out the public sector, and private sector pay rose at an annual rate of 3.4 per cent (both including and excluding bonuses) in the three months to July.
“This is a rate of increase that would normally worry policymakers into a pre-emptive hike in interest rates to avoid upward wage pressures feeding through to higher inflation.”
Following the figures being made public this week, the pound rose against both the dollar and the euro.
A delighted George Osborne said: “It is welcome news that pay packets are rising and jobs are being created. With wages up 2.9 per cent over the year and inflation low, working people have received the fastest real-terms rise in over a decade.”
However, Labour pointed to the fact that joblessness had risen for the third consecutive quarter and warned that ministers must not be complacent about the state of the UK’s employment market.