Looking ahead, many manufacturing/engineering firms will already be in the midst of negotiating October or November pay deals, while other employers and unions will be starting to think about the January 2008 pay round. Here are a couple of reasons why this should be interesting:

Inflation: while the government's preferred measure of inflation (on the consumer prices index) has dropped comfortably below the government's 2% target, the retail prices index (RPI) measure more commonly used as a cost-of-living benchmark for wage deals continues to be fuelled by high mortgage costs (which the CPI does not take into account) and was 4.1% in August, up from 3.8% in July. Most forecasters contacted by IRS (subscription required) think that RPI will decline fairly rapidly in 2008, but that will be much too late for most January '08 negotiators and possibly those in April too.

Companies' willingness to pay: it is hard to believe that the difficulties that the financial sector is currently experiencing (which I am not about to blog about - see Robert Peston's BBC blog and comments for one account) will not dampen the 2008 bonus round, which is mainly about bonuses in that sector. While this will impact on earnings data rather than pay settlements, if the economy is in a worse shape employers are obviously less likely to offer or accept high pay rises.

Next month we'll be publishing a wide-ranging survey of private sector pay trends over the past year and employers' predictions for the coming year, so we'll be able to shed some light on what employers think will happen in January.