Here’s today’s main stories so far:

In New York, stocks are subdued despite the dip in inflation last month

The Dow Jones industrial average and the S&P 500 are both lower, after an early bounce, with the tech-focused Nasdaq index is slightly higher.

• Dow: down 70 points or 0.2% at 34,800 points
• S&P 500: down 5 points or 0.1% at 4,463 points
• Nasdaq composite: up 10 points or 0.06% at 15,115 points

The energy, industrials, communications and materials sectors are all weaker, while healthcare and utilities are up.

Alex Kuptsikevich, the FxPro senior market analyst, points out that inflation is still high in historic terms, and today’s oil price rally (to six-week highs) could push it further.

A faster-than-expected slowdown in inflation should ease the pressure on the Fed with a tightening of monetary policy. However, it is too early to dismiss fears of rising prices and claim that the Fed was right to point out the transitory nature of inflation.

Still, it should not be overlooked that the rate of price increases remains one of the highest in 30 years and continues its month-to-month increase. The jump in oil and gas prices in recent days promises to keep some of the pressure on consumer prices.

The spread of the Delta variant pulled down some prices in August, points out Paul Ashworth of Capital Economics, as demand for travel weakened.

He also warns that supply chain problems aren’t fixed, due to disruption at factories in South-East Asia.

The more modest 0.1% m/m increase in core consumer prices in August will be heralded as a sign that the recent surge in inflation was transitory after all but, although the spread of the Delta variant has put the burst of reopening inflation into reverse, there are still plenty of signs of a building cyclical inflationary pressure. Headline consumer prices increased by 0.3% m/m last month, as gasoline, natural gas and electricity prices all increased by more than 1% m/m.

Reopening inflation had just about run its course anyway, as prices rebounded to pre-pandemic levels or higher, but the spread of the delta variant, which appears to be weighing on demand for high contact services, has put renewed downward pressure on those prices too. Hotel room rates fell by 2.9% m/m, airline fares fell by 9.1% m/m and motor vehicle insurance rate declined by 2.8% m/m. Separately, the 1.5% m/m decline in used vehicle prices suggests that supply shortages are easing, but new vehicle prices increased by 1.2% m/m and, with auto manufacturers announcing new factory closures because of the disruption to global supply chains caused by the spread of Delta in South-East Asia, shortages are likely to get worse rather than better.

The drop in US inflation to 5.3% in August is a win for policymakers who argued that inflation would be transitory.

So says Ben Laidler, Global Markets Strategist at multi-asset investment platform eToro.

And it means the Federal Reserve can tread cautiously as it winds back its stimulus measures...

“US inflation was a relief, inching down to 5.3% versus the same month last year, and with the month-over-month rise decelerating. This gives the Fed a further excuse to go slow in tightening monetary policy and supports equity markets.

“US consumer price inflation for August rose 5.3% versus the same month last year, down from the 13-year high 5.4% rate last month, and with a month-over-month decelerating sharply to 0.1% from prior 0.3%. Air fares, used car prices and auto insurance all fell, with increases led by gasoline and housing. This is a relief after the greater-than-expected rise in August producer price inflation, to 8.3%, reported earlier in the week.

“The better-than-feared inflation report supports the Fed view of only a ‘transitory’ rise in inflation, allowing them to continue only a very gradual road to a tightening of monetary policy, supporting equity markets and high valuations.”

The US dollar has dropped following the news that US inflation slowed in August, with core prices rising less than expected.

This has pushed the pound up to a five-week high, up 0.5% to $1.3904 - its highest since 9th August.

Traders are calculating that easing inflationary pressures mean the US Federal Reserve won’t rush to slow, or taper, its asset-purchase stimulus scheme.

Inflation across the US economy has slipped back, in a sign that some of the pandemic price pressures may be fading.

The US Consumer Prices Index rose by 5.3% in the 12 months to August, down from the 13-year high of 5.4% in July. Energy prices rose by 25% over the year, while the food index increased 3.7%.

On a monthly basis, prices rose by 0.3%, a slowdown on July’s 0.5%.

Significantly, annual core inflation -- stripping out food and energy - slowed to 4% from 4.3%.

During August, core inflation only rose by 0.1% -- the smallest monthly rise since February 2021.

And while new vehicles, recreation, and medical care costs rose in August....airline fares, used cars and trucks, and motor vehicle insurance all declined over the month.

That could bolster hopes that some of the price swings created by the pandemic are fading, meaning that inflation spikes could be transitory, as central banks have hoped.

More details and reaction to follow.....

Looking back at today’s UK jobs figures...the NIESR thinktank says the labour market shows signs of “a U-shaped recovery”.

With the number of pay-rolled employees returning in August to its pre-pandemic level of 29.1 million, the recovery seems to be on track, NIESR believes.

They add:

• Employment growth is fastest in London, which is catching up to the rest of the UK after being particularly hurt by the pandemic.
• The unemployment rate declined to 4.6 per cent and vacancies reached a record 1 million.
• Because of difficulties to fill in jobs, starting salaries are increasing fast, but the end of the furlough scheme should ease the pressure on salaries.
• The relaxation of self-isolation rules puts an end to the ‘pingdemic’.
• The growth in average weekly earnings including bonuses (AWE) in Great Britain decreased slightly in the three months to July to 8.3 per cent compared to a year ago, down from 8.7 per cent in the three months to June. This is in line with what we had forecasted.
• Excluding base effects, the growth in average weekly earnings was unchanged at 4.1 per cent in the three months to July, compared to the three months to June.
• Annual growth for average weekly earnings should ease from 8.7 per cent in the second quarter to 5.6 per cent in the third quarter as the base effect dissipates.

Cyrille Lenoël, principal economist at NIESR, says there’s a possibility that rising prices push earnings up:

“The end of the furlough scheme in September comes at a fortunate time when the robust recovery of the labour market provides hope that nearly all of the furloughed workers will be able to return to active employment. Underlying wage growth excluding base effect is around 4 per cent.

But the combination of a skills mismatch and the end of the furlough scheme is creating unusual uncertainty about the future path of wages. With consumer price inflation rising and expected to reach also 4 per cent at the beginning of next year, there is a risk that price inflation feeds into wage inflation.”

A ‘rare disconnect’ between asset prices and economic fundamentals is growing, according to the latest survey of investors.

Bank of America’s September Global Fund Managers poll found that macro optimism is “tanking” -- meaning investors are less upbeat about global economic prospects.

Expectations for global growth have slumped to the lowest since May 2020, with fewer investors expecting profits to keep rising.

Inflation expectations have also weakened, although just 6% of respondents are expecting a recession.

But despite the growing caution on the macroeconomic outlook, positioning in asset markets remains overwhelmingly bullish. Equity market protection designed to shield portfolios against a sharp drop in asset values is the lowest levels since January 2008.

Few investors are positioned for credit events, recession or stagflation, points out Michael Hartnett, BofA’s chief investment strategist, with the proportion of investors who are ‘long stocks’ and ‘short bonds’ much higher than historical averages.

UK consumer confidence has slipped, as people become a little less optimistic about their job security and the state of their household finances.

YouGov and the CEBR’s consumer confidence index dropped by 0.3 percentage points in August to 112.9, from 113.2 in July.

Falling optimism about house prices and job security prompted the slight fall, but the index still remains high (any reading over 100 shows more consumers are confident than not).

It found that:

• Homeowners felt less confident in the past 30 days but remain very positive
• Workers feel job security has worsened, with the measure falling by 1.6 points
• Business activity shows small signs of improvement, with workers reporting their workplace becoming busier

Kay Neufeld, Head of Forecasting and Thought Leadership at the Centre for Economics and Business Research, said August’s report shows that consumer sentiment has topped out.

Despite the small downtick in confidence, it should be noted that the index remains close to multi-year highs. Looking at the individual components, we see that business activity recorded increases in both the forward- and backward-looking metrics, which is an encouraging sign against the backdrop of the near standstill in July’s GDP growth.

Consumers have become gloomier about their financial situation in a year’s time which can be explained by the recent uptick in inflationary pressures. These are expected to further intensify in coming months.

“Overall, the latest reading of the Consumer Confidence Index suggests that the UK economic recovery is still underway, though headwinds are emerging as the initial boost from lifting lockdown restrictions starts to wear off.”

The world’s oil demand fell for a third consecutive month in August following an increase in Covid-19 cases in Asia, but a sharp rebound could follow in the final months of the year, according to the International Energy Agency (IEA).

Our energy correspondent Jillian Ambrose explains:

The global energy watchdog revised down its oil demand forecasts for the third quarter by 200,000 barrels a day after China put in new measures to curb travel by a third in a bid to stem the latest outbreak of Covid-19.

“Global oil demand remains under pressure from the virulent Covid-19 Delta variant in key consuming areas, especially parts of Asia,” the Paris-based agency said in its latest monthly oil market report.

The IEA said that despite the weak demand over recent months oil demand is expected to rebound in October as Asia’s energy-hungry economies begin to reopen with help from falling Covid-19 case numbers, progress in vaccine manufacturing and less restrictive social distancing measures.

The report said:

“Already signs are emerging of COVID cases abating with demand now expected to rebound by a sharp 1.6 million barrels per day (bpd) in October, and continuing to grow until end-year.”

The slowdown has caused the IEA to trim its oil growth forecasts for the year by 105,000 barrels of oil a day, but raise its estimate for 2022 by 85,000 barrels a day to 3.2m barrels a day.

Global oil consumption is expected to average 99.1m barrels of oil a day this year, around 4.7m barrels of oil a day higher than last year but still 1.1m barrels a day lower than in 2019.

Despite the oil market slowdown over the summer months global market prices have continued to rise, reaching a six week high of $73.51 a barrel earlier this week as US oil productions remains slow to return to full strength two weeks after Hurricane Ida wreaked havoc along the oil-rich Gulf Coast.

Further disruptions are expected from bad weather this week as Tropical Storm Nicholas has forced Royal Dutch Shell to evacuate staff from a Gulf of Mexico oil platform, and other companies have prepared for rain and hurricane-force winds.

The unplanned US outages have offset the increase in supply from the Organisation of Petroleum Exporting Countries (Opec) and its allies, leading the world’s total oil supply to fall by 540,000 barrels of oil a day last month.

Back in the markets, the oil price has hit a six week high as another hurricane hits the US Gulf coast.

Tropical storm Nicholas strengthened into a hurricane last night, and is expected to bring heavy rain and floods to coastal areas from Mexico to storm-battered Louisiana when it makes landfall on Texas Gulf Coast.

Authorities have scrambled rescue teams, fearing that Nicholas will bring flash floods and urban flooding.

The area is still recovering from Hurricane Ida, which disrupted much oil production in the Gulf of Mexico offline at the end of August.

Marios Hadjikyriacos, senior investment analyst at XM, says these storms are pushing up oil prices:

In the commodity arena, oil prices are trading at six-week highs after hurricane Nicholas made landfall on the Texas Gulf Coast, threatening to throw drilling sites and refineries that are still reeling from hurricane Ida into more disarray.

Natural disasters rarely have a lasting impact on oil prices, but when you chain two of them together at one of the world’s most important production hubs, it’s another story.

Brent crude, the international benchmark, is up 0.75% at $74.05 per barrel, its highest level since the start of August.

US crude has gained 0.6% to almost $71 per barrel, also a six-week high.

Trade news: Britain has delayed the implementation of some post-Brexit trade controls on imports, again...

The move means that physical checks of EU food imports due to start in January 2022 will now happen in July 2022.

A requirement to pre-notify border staff of arriving food products has also been delayed until the start of 2022 -- as the UK continues to postpone checks (having struggled to build the infrastructure needed to process incoming goods).

Brexit minister David Frost said in a statement that the move will help firms “focus on their recovery from the pandemic”.

It will also make it easier to import foods into the UK from the EU -- while UK food exporters have faced new paperwork demands and border checks since the start of the year.

Here’s Reuters take:

Britain said on Tuesday it was delaying the implementation of some post-Brexit import controls, the second time they have been pushed back, citing pressures on businesses from the pandemic and global supply chain strain.

Britain left the European Union’s single market at the end of last year but unlike Brussels which introduced border controls immediately, it staggered the introduction of import checks on goods such as food to give businesses time to adapt.

Having already delayed the introduction of checks by six months from April 1, the government has now pushed the need for full customs declarations and controls back to January 1, 2022. Safety and security declarations will be required from July 1
next year.

“We want businesses to focus on their recovery from the pandemic rather than have to deal with new requirements at the border, which is why we’ve set out a pragmatic new timetable for introducing full border controls,” Brexit minister David Frost
said.

“Businesses will now have more time to prepare for these controls which will be phased in throughout 2022.”

Industry sources in the logistics and customs sector have also said the government’s infrastructure was not ready to impose full checks.

The move means that:

• The requirement for pre-notification of agri-food imports will be introduced on 1 January 2022 as opposed to 1 October 2021.

• The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022.

• Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022.

• The requirement for Safety and Security declarations on imports will be introduced as of 1 July 2022 as opposed to 1 January 2022.

Supermarket prices have risen 1.3% this month, marking a significant increase in grocery price inflation as shoppers are affected by supply chain difficulties -- such as the record job vacancies seen this summer.

Price rises were most significant in savoury snacks, cat food and packaged cakes and pastries according to analysts at Kantar, who said that the pace of inflation in September had more than tripled from just 0.4% in August, which was the first month of price rises since April.

The figures come after multiple forecasts from business leaders of an autumn rise in living costs ignited by Covid and Brexit disruption, including a shortage of delivery drivers.

Consumer goods makers such as Nestlé, Procter & Gamble and Unilever have said they will be forced to increase their prices and retailers predict the cost of filling up a trolley will climb further if disruption continues.

Fraser McKevitt, the head of retail and consumer insight at Kantar, said:

“For much of 2021 shoppers have been shielded from price increases, with more being sold on promotion this year compared to 2020. But in the past month only 27.5% of spending was done on deals.

Other than the early days of lockdown last year, that is the lowest level recorded in the 15 years which we have tracked this data.”

More here:

In the City, shares in online grocery technology firm Ocado have fallen over 2% after it revealed that the fire at its warehouse in south-east London in July will leave it with a £10m loss.

Ocado also warned it expects to spend up to £5m hiring and paying delivery drivers amid a nationwide shortage -- a timely example of the UK’s job vacancies.

The blaze at the facility in Erith caused by the collision of three robots, the online supermarket’s third in three years, resulted in 300,000 orders, or about £35m of revenue, being lost.

Ocado said the business disruption cost it £10m, plus another £10m for stock and other write-offs. The resulting net cost, not covered by insurance, is estimated to be £10m, which will drag down profits for the current year.

Ocado also faces a bill of up to £5m this year because of the rising cost of large goods vehicle and delivery drivers. A surge in online shopping during the pandemic coupled with a national driver shortage caused by Brexit has forced Ocado, and other supermarket groups, to raise hourly rates and offer signing-on bonuses.

Employers scrambling to hire staff amid widespread labour shortages after lockdown helped to return the number of workers on company payrolls to pre-pandemic levels in August, official figures show.

The Office for National Statistics said the number of payroll employees increased by 241,000 to 29.1m in August, lifting employment in all regions of the UK to pre-Covid levels except in London, Scotland and south-east England.

It came as the number of job vacancies soared to more than 1m in August for the first time since official records began, rising by 35% in the space of three months across all sectors of the British economy.

Reflecting difficulty hiring staff after lockdown for a wide range of businesses across Britain, the ONS said the largest increase was in accommodation and food services – the sector which includes hotels, pubs and restaurants – with a 75% increase over the past three months.

Despite the rise in the number of payrolled employees in August, which is collected from HMRC data, the ONS said employment in the UK still remained below pre-Covid levels in official data gathered in its labour force survey in the three months to July.

Unemployment was estimated at 4.6%, a drop of 0.3 percentage points on the previous quarter but still 0.6 percentage points higher than before the pandemic struck.

Employment, which measures the proportion of people aged 16 to 64 in work, rose steadily to 75.2% in the three months to the end of July, but remains 1.3 percentage points lower than pre-Covid levels.

Today’s earnings data would have given Britain’s pensioners an 8.3% boost to their weekly payments next year.... except the government suspended the triple lock last week.

Under the triple lock, pensions rise whichever was higher -- total pay for the three months to July, September’s annual inflation rate, or 2.5% a year.

So the 8.3% jump in total earnings over the last year would have lifted pensions by the same amount, but work and pensions secretary Thérèse Coffey announced last week that the triple lock will be temporarily suspended next year.

Helen Morrissey, senior pension and retirement analyst at Hargreaves Lansdown, says pensioners on the full new state pension would have seen an “inflation busting” increase of almost £15 per week, from £179.60 per week to £194.50.

The basic state pension would have risen by almost £11.50, from £137.60 per week to around £149.

Morrissey says:

It will be a bitter disappointment for many pensioners not to benefit from this morning’s bumper increase which would have put an extra £14.90 per week into their pockets if they were on the new state pension and £11.42 for those on the basic state pension. However, it is well known earnings data has been distorted by the effect of furlough and to award such increases at a time when the working population is struggling with the fall out of the pandemic would not have been popular.

The data stripped out some of the distorting effects of the pandemic, but even doing this would have left the door open for rises of somewhere between 3.6% and 5.1% - again an increase towards the upper end of this scale may have been as unfair. We will wait to see what the future holds for the triple lock after this year’s suspension and await next month’s inflation figures to see what next year’s increase is likely to be.”

Shifting to a ‘double lock’ will avoid the pensions bill rising by around £5bn, according to Steven Cameron, Pensions Director at Aegon:

“Today’s earnings figure gives an indication of how much the government has saved by removing the earnings element of the state pension triple lock for next year. The pandemic has created huge distortions to the average earnings figures with a fall in earnings at the start of the pandemic followed by a very sharp increase as furlough ended.

“Had the triple lock remained untouched, state pensioners would have been granted an unrealistic increase of 8.3% next April, costing the government around £7.5bn next year and every future year. But Thérèse Coffey’s announcement last week to suspend the triple lock for a year, will now mean the state pension increases by price inflation or 2.5%, whichever is higher. It is expected inflation will trigger the increase, and if this figure is around 3%, the government will save the around £5bn moving to the ‘double lock’.

“Today’s state pensions are paid for by today’s workers through National Insurance contributions. Maintaining the triple lock unadjusted would have led to serious questions over intergenerational fairness, particularly in light of last week’s decision to increase NI by 1.25% to fund health and social care.”

It is a blow to pensioners, though, as Kevin Maguire of the Daily Mirror points out:

But Ian Browne, pensions expert at Quilter, argues it’s the right things to do:

“Last week we saw the pensions triple lock promise broken and the average wage increase element of the scheme scrapped for this year. Data released today by the Office for National Statistics will likely be a source of grief for pensioners as the increase they could have received is made clear.

“This morning’s data reveals earnings growth continues to remain at unusually elevated levels as a result of the unwinding of the furlough scheme and the economic re-opening. Had the average earnings data been taken into account, pensioners would have gained an additional 8.3% on their pension this year.

“While many will be unhappy having now received confirmation of what they could have had, the data only really serves to prove that a one off scrapping of the average earnings element was the right thing to do. Had the triple lock not been amended, billions would have been spent on the pension increase during an already difficult year for public spending.

Every sector of the UK economy has posted more job vacancies over the last quarter, with transport companies, and bars, restaurants and hotels, among the areas struggling the most.

The record total of vacancies (over 1 million) meant there were 3.4 vacancies for every 100 employee jobs, also a record high.

The ONS says:

The fastest rate of growth was seen in other service activities, which grew by 93.3% (12,500), followed by transport and storage at 76.3% (20,300) and accommodation and food service activities at 75.4% (57,600).

In the latter two categories labour demand has increased rapidly while staff availability fell because of a mix of employees leaving these sectors to find employment elsewhere and a reluctance of workers to return to their previous roles.

The accommodation and food service activities industry has the highest ratio of vacancies -- with 5.9 positions unfilled out of ever 100 employee jobs.

Several experts are warning that ending the furlough scheme on 30th September will hurt the jobs recovery, after the jump in payrolls and vacancies over the summer.

Paul Craig, portfolio manager at Quilter Investors, fears that some furloughed staff will not return to their jobs:

“Job creation continues apace in the UK, but for how long this can be sustained is unclear just now. The end of this month sees the withdrawal of the furlough scheme, and with 1.6m people still having their wages subsidised in one shape or another, it is unfortunately unlikely all of these people will be kept on into full-time employment.

Craig also warns that lifting national insurance rates (the health and social care levy) could also deter firms from hiring:

“Despite the success of the furlough scheme and the mass unemployment that many had feared being prevented, the jobs market remains very much in recovery and below pre-pandemic levels. As has been widely reported the UK has somewhat of a skills shortage, with many industries reporting hiring difficulties and lack of available labour.

With Covid following close on the heels of Brexit there is uncertainty to whether the UK will be able to match those seeking work with the jobs that are available. The new national insurance levy also adds an additional cost to employers, and as such we remain unsure whether this could also cause businesses to review or temper future hiring needs.

Yael Selfin, chief economist at KPMG UK, says the labour market held steady despite the impact of the ‘pingdemic’, but fears there is “more pain to come.”

While the pressure should ease as more people look to return to work and the furlough scheme ends, the UK labour market is set to remain choppy with vacancies taking time to fill due to skills shortages and reduced availability of overseas workers.

“Despite the mid-summer surge in infections and strict self-isolation rules, the employment rate rose strongly in the three months to July as activity was gradually returning back to normal.

“Pay growth continued its strong run, although the rate eased compared to June. Furlough effects which depressed pay last summer now contribute to higher pay growth, potentially boosting it by 2-3%. Pay may rise further in the coming months, supported by the recovery in the labour market.”

Ben Harrison, Director of the Work Foundation thinktank, says the government should maintain furlough support for some industries:

“This month’s statistics show positive signs of recovery in the labour market, with the number of payroll employees increasing over August by 241,000 to pre-pandemic (February 2020) levels. With unemployment continuing to decrease slowly, this shows people coming out of furlough are largely going back to their jobs.

“However, this is no time to be complacent. At the end of July, there were still 820,000 fully furloughed jobs. Sectors such as the arts and accommodation remain more reliant on the furlough scheme, as do smaller businesses generally, and younger workers.

“With the potential for public health restrictions to return as we head into winter, the Government should step back from axing furlough in its entirety, and instead target the support at those sectors which remain most affected by the pandemic, with a larger employer contribution to ensure the roles supported are truly viable for the future.

“Alongside this, given the risk they may soon need to find a new job, those workers currently on furlough should be able to access employment support, such as advice and information, that is usually restricted to those who have made a claim or are receiving Universal Credit or other means tested benefits.”

Britain’s record job vacancies threatens to slow the recovery this autumn, if firms can’t find the workers they need.

Neil Carberry, chief executive of the Recruitment & Employment Confederation (REC), says the government should allow some flexibility in the immigration system, to help fill jobs:

“The recovery in the number of pay-rolled employees to pre-pandemic levels underlines the huge amount of hiring that is going on right now. With the ONS vacancy count now over 1 million for the first time ever, and most individual sectors having record numbers of unfilled jobs, there is a real risk of shortages impacting the recovery through the autumn.

“There are a number of things we can do to solve this crisis. Government has convened a cross-department forum to tackle these shortages, but this will only be effective if industry experts are involved as well. Government must work with business to improve training opportunities for workers to transition into the most crucial sectors, and allow some flexibility in the immigration system at this time of need.

And while businesses are raising salaries in many sectors, they must think more broadly about how they will attract and retain staff through improved conditions, facilities and staff engagement, working with recruiters, who are the professional experts in all of this.”

Several business leaders have called for EU lorry drivers to be given temporary visas to help address shortages - but the government has asked them to invest in UK workers instead.

Today’s jobs report shows that labour market slack is declining fast, with labour shortages are contributing to faster underlying pay growth, says Ruth Gregory of Capital Economics:

Although fading compositional and base effects meant that the headline growth rate of average earnings fell from 8.8% in June to 8.3% in July, July’s figure was a touch stronger than expected (consensus forecast 8.2%). What’s more, underlying pay growth is estimated to have risen from a range of 3.5-4.9% in June to 3.6-5.1% in July.

The surge in job vacancies suggests that labour shortages are still intensifying, putting more upward pressure on wages, she adds.

Encouragingly, though, employment on the Labour Force survey rose by 183,000 in the three months to July, more than the consensus.

Gregory explains:

That was the largest rise in employment since January 2020 and an impressive result given that firms started to pay 10% of the wages of their furloughed workers.

The 86,000 fall in ILO unemployment pushed the unemployment rate down a notch from 4.7% in June to 4.6% in July. Meanwhile, the figures for August suggest more good news is around the corner, with PAYE employment in August rising by 241,000 m/m.

Jonathan Athow, the UK’s deputy national statistician, points out that the recovery is uneven..... and that younger workers were badly hurt by the job losses early in the pandemic:

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

UK company payrolls have returned to their pre-pandemic levels, and vacancies are at a record, as the long recovery from the Covid-19 crisis continues.

The latest unemployment report, just released, shows that “the labour market continuing to recover”, according to the Office for National Statistics.

The number of payroll employees rose by 241,000 in August to 29.1 million, returning to levels seen in February 2020 before the first lockdown.

All regions except London, Scotland and South East are now above pre-pandemic levels, the ONS reports.

And despite this rise in payrolls, vacancies are at a record levels as firms across the economy struggle to fill positions, particularly in the hospitality sector, and transport and storage.

The number of job vacancies in June to August 2021 was 1,034,000 -- having broken over 1 million for the first time since record began this summer -- and is now 249,000 above its pre-pandemic levels of January to March 2020.

The ONS explains:

Vacancies grew on the quarter in June to August 2021 by 269,300 (35.2%), with all industry sectors increasing their number of vacancies and the majority reaching record levels; the largest increase was seen in accommodation and food service activities, which rose by 57,600 (75.4%).

These data comes just a couple of weeks before the UK’s furlough jobs protection scheme is due to end - with unions and industry lobby groups warning of a spike in redundancies as employers, many of them struggling to cope with the impact of the Delta variant, prepare to take back staff.

The ONS also reports that the unemployment rate was 4.6% in the three months to July, 0.3 percentage points lower than the previous quarter.

The employment rate has risen by 0.5 percentage points over the last quarter, to 75.2%.

More details and reaction to follow....

Also coming up today

Investors are bracing for the latest US inflation report, which will show whether consumer prices are still rising at the fastest pace in 13 years.

This afternoon’s US CPI numbers could make for uncomfortable reading for US policymakers next week, especially if it follows the upward trend of US factory gate prices for August, says Michael Hewson of CMC Markets.

In July there was some relief that US CPI remained steady at 5.4%, raising the possibility that we may have seen a peak. More encouragingly, core CPI slipped back from 4.5% in June to 4.3% in July, however even if central bankers seem sanguine about rising prices, US consumers definitely aren’t if the New York Fed’s latest survey of inflation expectations are anything to go by. Consumer expectations for inflation over the next three years are at a heady 4%, while for one year they are 5.2%.

The biggest worry aside from the surges we are seeing in energy prices, which is worrying enough, has been the continued rise in PPI last week to 8.3%, from 7.8%, which suggests that we may have only seen a pause in the upward trajectory in prices.

We also get the latest assessment of the oil market from the IEA.

And chancellor Rishi Sunak is hosting some of the UK’s biggest tech firms at an inaugural conference, called Treasury Connect, in East London.

European stock markets are expected to open higher:

The agenda

• 7am BST: UK unemployment report
• 9am BST: IEA monthly oil market report
• 1.30pm BST: US consumer price inflation for August