PAY settlements in the engineering sector remained at their historical low levels between October and December last year, new figures have shown.

The Engineering Employers' Federation's (EEF) January bulletin showed that the average pay settlement in the last three months of 2000 was for an increase of 2.8 per cent.

This is the same level as the previous three month average to the end of November, and means the average settlement has been below three per cent for more than two years, the longest time on record.

It is also still below the rate of inflation, which was 2.9 per cent last month, with the underlying level falling to two per cent .

''These figures continue to show that the Bank of England has little to fear from wage inflationary pressures in the manufacturing sector,'' said David Yeandle, EEF deputy director of employment policy.

The Federation's Pay Bulletin analysed 163 pay settlements affecting 15,310 employees.

Figures for January also showed that the number of pay freezes in the sector was beginning to fall. The three month average to December showed there were pay freezes in just one in 12 of all settlements