THE level of pay settlements reported by engineering and manufacturing companies has fallen to two per cent.

It is the lowest figure reported by the Engineering Employers' Federation since that statistic was first collated in 1984.

For the three months to the end of May, the average settlement was 2 per cent compared with 2.2 per cent for the previous three month period to the end of April.

During April, the average for 168 reported settlements was 1.8 per cent. In addition. more than a third of companies either froze or deferred pay deals.

Mr Andrew Semple, external affairs manager for EEF North-west, said:

"The fact that engineering pay settlements have fallen to their lowest level since the EEF started to keep records in this format demonstrates very graphically that there are currently no wage inflationary pressures coming from this sector of the economy.

"It confirms our view that it is therefore far too early for the Monetary Policy Committee to be considering increasing interest rates."

The EEF in the North-west has more than 700 member companies employing around 8,000 staff.