The US economy added just 194,000 jobs in September, far fewer than expected and the second month of disappointing growth, as the Delta variant and a tight labor market appeared to be holding back hiring.

The S&P 500 and the Nasdaq have risen slightly, while the Dow Jones is flat. Over here, the FTSE 100 is 0.36% ahead and Italy’s stock market is up 0.3%, while Germany’s Dax and France’s CAC have slipped slightly.

The Bank of England has warned that rising inflation could trigger a sell-off in global financial markets, with damaging consequences for the UK economy.

European gas prices have risen again today but only partially recouped yesterday’s losses. They are about a third below the record highs hit on Wednesday, but are up about 300% this year.

The Ofgem boss said that the energy price cap would rise sharply in April and said the regulator would review the way it is calculated, in light of soaring wholesale gas prices.

Our economics editor, Larry Elliott, has taken a look at how a resentful UK plc hit back at Boris Johnson’s conference business-bashing this week.

The transport secretary, Grant Shapps, has said he wants to scrap costly PCR tests for international travellers returning to England in time for the October half-term holiday, in a boost to airlines and the broader industry.

The pent-up public demand to seek out entertainment as Covid restrictions lifted has fuelled a boom in leisure pursuits, with cinemas and bowling alleys hitting pre-pandemic highs, while Brighton Pier has recorded the best week in its history.

A struggling household energy supplier switched thousands of unprofitable customers to rival companies without their express consent, in an apparent bid to avoid financial collapse.

Chinese officials have ordered more than 70 mines in Inner Mongolia to increase coal production by almost 100m tonnes, with the country battling its worst power crunch and coal shortages in years.

Thank you for reading. Have a great weekend! We’ll be back next week. Good-bye! - JK

NEWSFLASH: The US non-farm payrolls figures are out. Yikes. The economy added just 194,000 jobs in September, far fewer than the 500,000 expected. The jobless rate fell, though, to 4.8% from 5.2%.

The Bank of England has warned that rising inflation could trigger a sell-off in global financial markets, with damaging consequences for the UK economy, reports our economics correspondent Richard Partington.

Against a backdrop of soaring energy prices and severe shortages of workers and materials, Threadneedle Street said inflationary pressures were rising as the pace of economic recovery from the pandemic slows.

In its regular financial health check, the Bank’s financial policy committee said risky asset prices in several markets had risen to historically high levels and could be primed for a sharp fall amid rapid growth in inflation.

“Asset valuations could correct sharply if, for example, market participants re-evaluate the prospects for growth, inflation or interest rates,” the FPC said.

Yesterday, the Bank of England’s new chief economist has warned high rates of inflation could last longer than expected, due to severe supply shortages and rising household energy bills.

Huw Pill, who replaced Andy Haldane at Threadneedle Street last month, said inflationary pressures were still likely to prove temporary and would fall back over time, as the economy adjusted after disruption caused by Covid and Brexit.

Many companies that took out emergency loans during the Covid-19 pandemic are now at risk of collapse because of those same loans, the Bank England has warned.

Companies across the UK which before Covid would have been turned down for loans were able to tap into government-backed schemes during pandemic times, reports PA.
Now, many of these are facing loan bills that they might be unable to pay off.

On Friday, the Bank warned that higher borrowing during the pandemic has likely put more businesses at risk.

The increase in debt - though moderate in aggregate - has likely led to increases in the number and scale of more vulnerable businesses.

As the economy recovers and government support, including restrictions on winding up orders, falls away, business insolvencies are expected to increase from historically low levels.

Around 1.7 million companies borrowed money under three emergency loan schemes that were launched last year. Many of them were tiny companies that had not borrowed before, and desperately indeed money to stave off immediate collapse.

Though the terms of the loans are generous - the interest on Bounce Back Loans, which were the most common, is only 2.5% - the businesses still have to pay back their banks. They have up to 10 years to do so and can request several periods of lower payments.

In other (exciting) news, the transport secretary, Grant Shapps, said he wants to scrap costly PCR tests for international travellers returning to England in time for the October half-term holiday, in a boost to airlines and the broader industry, reports Mark Sweney.

The tests, which cost about £75 each on average, would be replaced by cheaper lateral flow tests. The move to make travel easier follows the government announcement on Thursday that the number of countries on the “red list”, which have the toughest restrictions, is to be cut to only seven.

Addressing plans for a shift in policy on testing, Shapps said, speaking on Sky News:

We want to get this done for half-term for people.

When it comes to the safety aspect, we are still requiring a test. But we are going to move that down from being a PCR one, an expensive one that you have to send away to a lab, to a lateral flow test, so that will help and enable us to monitor things. We anticipate having it ready for the half-term. What a difference it will make for people.

Returning to earlier news that gas prices are rising again on expectations of higher demand for heating and amid supply concerns. They have partially recouped yesterday’s losses, but remain below the record highs reached on Wednesday.

Reuters reports:

* European gas prices are now around a third off peaks hit earlier this week, though they still are up some 300% this year.

* British gas for Q1 2022 delivery rose 17.9p to £2.7 per therm.

* The Dutch gas price for December delivery jumped €4.14 to €103.85 per megawatt hour.

* The November gas price at the Dutch TTF hub dipped by 50 cents to €101.50, having risen to €105.00 euros/MWh in earlier trade.

Refinitiv analysts said:

The signal from weather inputs is moderately bullish since wind output remains below normal and temperatures are expected to dip further, supporting thermal power generation and heating demand in Europe.

Gas heating demand is expected to ramp up sharply and weather will be the major driver of gas fundamentals.

Other energy news:

* The UK system was 10 million cubic metres over-supplied on Friday, National Grid data showed.

* In the UK, peak wind power output will drop from 5.1 GW on Friday to 3.8 GW on Saturday, Elexon data showed.

* Gazprom’s China-focused Amur gas processing plant in Russia’s Far East has halted operations after a fire early on Friday, a spokesman for the plant told Reuters. The broader implications were not immediately clear.

* The benchmark Dec-21 EU carbon contract was down 49 cents at €59.88 per tonne.

Chinese officials have ordered more than 70 mines in Inner Mongolia to ramp up coal production by nearly 100m tonnes, as the country battles its worst power crunch and coal shortages in years, Reuters reports.

The authorities face record-high prices and shortages of electricity that have prompted power rationing across the country, crippling industrial output. The proposed increase would make up nearly 3% of China’s total thermal coal consumption.

In an urgent notice dated 7 October, the Inner Mongolia regional energy department asked the cities of Wuhai, Ordos and Hulunbuir, as well as Xilingol League, or prefecture, to notify 72 mines that they may operate at stipulated higher capacities immediately.

“This demonstrates the government is serious about raising local coal production to ease the shortage,” said a Beijing-based trader, who estimated the production boost may take up to two to three months to materialise.

The 72 mines listed by the Inner Mongolia energy bureau, most of which are open pits, previously had authorised annual capacity of 178.45 million tonnes.

Lara Dong, senior director with IHS Markit, said:

It will help alleviate the coal shortage but cannot eliminate the issue.

The government will still need to apply power rationing to ensure the balancing of the coal and power markets over the winter.

Inner Mongolia is China’s second-biggest coal-producing region, churning out just over 1bn tonnes in 2020 and accounting for more than a quarter of the national total, official data show.

However, that output was down 8% in 2020 and was falling every month from April through July this year, partly due to an anti-corruption probe initiated last year by Beijing targeting the coal sector, which led to lower production as miners were banned from producing above approved capacity.

Neighbouring Shanxi province, China’s biggest coal region, had to close 27 coal mines this week due to flooding.

Away from the energy crisis, Mark Sweney, our media business correspondent, has looked at how Odeon is doing following the premiere of the latest James Bond movie.

The James Bond juggernaut continues to break records with Odeon, the UK’s biggest cinema chain with 112 sites across the UK, selling more than one million tickets in the first week since No Time To Die’s premiere.

The chain said that the film, which became the most successful movie at the British box office since the pandemic began after just three days, has now notched up the highest attendance since Star Wars: Rise of Sky Walker in 2019.

A significant sign of encouragement for the movie industry, which has struggled to attract mass audiences when cinemas have been allowed to reopen during the pandemic, is that about half of those who have watched Daniel Craig’s last outing as 007 are visiting a cinema for the first time since the pandemic began.

The all-important movie snack business also appears to be back on track, an important source of profits for cinema owners, with Odeon so far selling Bond fans six tonnes of Pick ‘n’ Mix, popcorn weighing the same as 23 Aston Martin DB5s and enough soft drinks to fill the luxury car’s tank nearly 3,000 times.

Britain’s energy regulator Ofgem has no plans to increase the consumer price cap before April but is likely to introduce a significant rise then, reflecting soaring wholesale gas prices, according to its boss.

Jonathan Brearley, chief executive of the energy regulator, said prices are likely to go up “significantly” for households next April. He added that the watchdog will look at how the energy price cap is calculated, in light of soaring wholesale gas prices. He told BBC radio 4’s Today programme:

We can’t predict everything, and the wholesale market, as we’ve seen, has gone up and down extremely quickly so we can’t predict fully what that will be.

But, looking at the costs that are in the system, we are expecting a significant rise in April...

We do expect significant rises in prices.

This is an extraordinary event, this is an incredible change we’ve seen since August in the underlying price of energy. Naturally any regulator is going to look at that and think: well what does this mean for the systems and the processes and the formulae we need to calculate things like the price cap. We need to have a wider look across the regulatory framework to make sure the system is robust enough to manage this sort of thing in the future.

He also said other countries face similar challenges.

The root cause of this is an extraordinary change in the gas price. It isn’t just Britain that’s struggling with this. We talk to regulators across the world. Look at France, Spain, Germany, Japan, all systems are struggling to cope. with such an extraordinary change. We need to sit down with the industry, look forward and make sure we make a more resilient market that can manage shocks like this in the future.

Asked whether the energy price cap could be changed more frequently, he replied:

Too early for us to come out with solutions.

We have no plans to raise the price cap before April. We need to have a look at the formulae ... the calculations that underpin it.

He said “every [energy] company is feeling the strain”.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the UK’s supply chain crisis and business.

The US has warned Russia not to exploit the current gas crisis. The US national security adviser Jake Sullivan has told the BBC that any attempts to exploit the crisis would backfire.

President Vladimir Putin has indicated that Russia might boost supplies, but some analysts doubt that this will ever happen. Russia appeared to use the crisis as leverage to get its controversial Nord Stream 2 pipeline approved.

Adeline Van Houtte, Europe analyst at the Economist Intelligence Unit, says:

Comments from Mr Putin appear to have provided some comfort to the market. However, whether these additional gas supplies depend on a quick approval of Nord Stream 2 or not may not be the main issue.

Currently, the Russian domestic gas market remains tight, with its inventories running low, output already near its peak and winter looming in Russia as well, limiting gas export capacity.

There is also little sign that Gazprom — the Russian gas export pipeline monopoly, which supplies 35% of European gas needs — is attempting to pump more gas to Europe’s spot buyers via existing routes, and overall given its small room for manoeuvre, it is unlikely that Gazprom could deliver more than around 190bcm (billion cubic meters) to Europe this year. European prices are unlikely to cool substantially in 2021.

More than a million extra British households won’t be able to afford to heat and power their homes next spring, as energy bills are expected to rise again in April, according to a charity.

National Energy Action says 1.2 million to 1.5 million additional households will be plunged into fuel poverty, the BBC reported. About 4 million are already in fuel poverty, so this would take the total to up to 5.5 million. Ofgem, the regulator, said the price cap would have to rise again next year if wholesale gas prices continue to go up.

Analysts are forecasting that this could push a typical annual bill by a further £400 to £600 next April, which would mean a 20% increase in households experiencing fuel poverty.

Clare Moriarty, chief executive of Citizens Advice, said fuel poverty definitions vary across the UK, but it’s essentially people facing a choice between heating and eating. She told BBC radio 4 Today programme that the government needs to plan ahead:

It’s really important the government thinks now about what may need to be put in place come next spring when we’re going to see even more problems with people’s energy bills.

She doesn’t think the energy price cap is “broken,” though, saying the situation would be even worse without it.

Those struggling can get some help: there’s the Warm Home Discount (£140 towards your fuel bill if you qualify); winter fuel payments for older people, schemes to make homes more energy efficient, and a £500m household support fund to help people who are in hardship, which runs out in March. But these are winter schemes, Moriarty said, and people will need more support next spring.

In the meantime, a key survey showed that China’s service sector returned to growth last month, as a major Covid-19 outbreak in the eastern province of Jiangsu receded, offering some support to a slowing economy.

Asian shares have risen, and are set to snap four weeks of losses, with Chinese markets coming back after a long holiday. Japan’s Nikkei is 1.3% ahead while China’s CSI 300 made a similar gain and the Shanghei Composite Index rose 0.5%.

The Agenda

• 11am BST: Ireland inflation for September
• 12.00pm BST: Bank of England quarterly bulletin
• 1.30pm BST: US Non-farm payrolls for September (forecast: 500,000)