Pay deals in manufacturing rose slightly between October and December, a Confederation of British Industry survey has revealed.
The CBI's Pay Databank Survey said the average increase in manufacturing pay awards was three per cent in the three months to December, compared with 2.7 per cent in October.
Settlements averaged 2.3 per cent at the same time a year ago.
In the service sector, pay awards rose from 3.8 per cent in October to 4.2 per cent in the three months to December. In December 1999, settlements averaged about 3.6 per cent.
Kate Barker, CBI chief economist, said: "The headline inflation rate has been the main source of upward pressure on settlements.
"Recruitment as an upward pressure on settlement levels in this year's pay round has picked up since we last reported.
"The fourth quarter is a quiet time of the year for pay reviews so the impact of these settlements on overall earnings will be limited."
She added that January's pay round was a key one and the Bank of England's Monetary Policy Committee may wait for evidence of pay trends in 2001 before deciding whether to cut interest rates again.
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