Stocks up, dollar down after May’s US jobs report – as it happened

Graeme Wearden

from on 2021-06-04 16:43 (#5JN4B)

Rolling coverage of the latest economic and financial news

Earlier:

5.43pm BST

That's all for this week. Here's today's stories:

5.42pm BST

Germany's finance minister, Olaf Scholz, is also optimistic that the G7 will agree an historic tax agreement.

Reuters has the details:

German finance minister Olaf Scholz said he was confident that Group of Seven (G7) talks would end in an agreement on global taxation that would change the world.

These are very successful talks, we are making progress and I'm absolutely confident that we will get agreements today and tomorrow, and we will be able to have a very clear message on global corporate taxation," he told the BBC following the first day of G7 finance ministers' meeting in London.

5.32pm BST

Back at the G7 finance ministers meeting in London... the UK has said that progress is being made in talks to reform global corporate tax rules.

In a statement, the Treasury says:

The group held productive negotiations about reforming the global tax system and tackling the tax challenges that arise in a complex, digital global economy.

UK says G7 finance ministers' talks were productive https://t.co/LycmQzeS93 pic.twitter.com/A51MNYw1mI

NEW:
Just spoke to French fin minister Bruno Le Maire at G7 in London.

We are just 1mm away from an historic agreement" - says countries such as Ireland need to get on board".

Remaining sticking point - min tax rate, 15% only a starting point" excl on @BBCNews channel soon

Le Maire: rate is most tricky difficulty, and I think that if the negotiation is still underway, that's because we are still working on these really tricky points of the rate"..

clearly 15% is only a starting point. And if it can be higher, it is better to have a higher level"

we are spending a lot of public money to protect our economies against the consequences of COVID, and to have a quick and v strong economic recovery, but we need money, & we need new resources, I would think that these new resources are the right ones and useful for all of us."

New minimum & digital tax should raise significant sums" not just for US, Le Maire tells me. Asked how he will sell 15% plus min corp tax to his colleague the Irish finance minister:

even Ireland.. must understand they have to give the agreement to these major breakthrough"... pic.twitter.com/IahIVmPiN7

I can understand the difficulty of Ireland & some other European countries, but when there's such international impetus, this is in the interest of all 27 EU member states to say, yes, we are on board, and we are supporting this new international tax system" Le Maire tells me

5.23pm BST

European stock markets have closed at a new record high tonight.

The pan-European Stoxx 600 ended 0.4% higher at 452.57 points, with gains in Germany (+0.4%), France (+0.1%), and Italy (+0.46%).

The positive direction of wage growth and low unemployment will be welcomed, but today's lacklustre job numbers will raise concerns around the resilience of the U.S. labour market - and to what extent the pace of the Covid-19 vaccination programme will boost economic activity and employment.

However, as we move into the summer, the pace of economic growth remains robust, notwithstanding the weaker than expected jobs report. With vaccines continuing to bring COVID cases down, and the economic reopening kicking into higher gear, the data is starting to shine. Gross domestic product (GDP), although a lagging indicator, grew at an annualized quarter over quarter rate of 6.4% in the first quarter. Much of the strength is rightly attributed to the fiscal aid that has been injected into the economy.

5.07pm BST

Back in London, the stock market has closed for the week, with the FTSE 100 index up 4.6 points at 7069.

Travel stocks lagged behind, as the airline industry reeled from last night's decision to put Portugal on the amber list', meaning arrivals must quarantine on their return.

4.57pm BST

A drop in orders for motor vehicles and parts hit US factory order books in April.

New orders for US-made goods fell by 0.6% in April, a bigger decline than the 0.2% dip expected, following a 1.4% rise in March.

New orders for manufactured goods fell 0.6% in April, pulling back after rising by 1.4% in March. Durable goods orders fell by 1.3% in April, but sales for nondurable goods firms edged up by 0.1%. pic.twitter.com/0Y1AKdrvP2

Supply chain disruptions continue to challenge the sector, including in the motor vehicles and parts sector, which had orders decline by 1.8% in April. Excluding transportation equipment, factory orders rose 0.5% in April, with demand for durable goods up 1.0% for the month.

US factory orders fall more than expected in April https://t.co/HzPjLArxq0 via @Reuters pic.twitter.com/Ru07PAJEcM

4.35pm BST

Today's jobs report will intensify the debate over labor shortages, says Daniel Zhao of Glassdoor:

The report doesn't end the debate around labor shortages, but instead will provide ammo to both sides of the political debate.

The slower-than-expected job gains and drop in labor force participation will be pointed to as evidence that the recovery is being held back by workers staying out of the labor force. Conversely, leisure & hospitality leading job gains despite widespread reports of shortages will be pointed to as an argument for why labor shortages are not significantly impeding job gains.

Job gains were largest in leisure & hospitality (+292K). Together, educational services & state & local govt education also added +144K.

These reopening service industries drove the largest job gains in May.#JobsReport #JobsDay 3/ pic.twitter.com/uc9QkJlmcQ

It's especially important to see jobs growth in the recovery for leisure & hospitality and education bc they remain two of the worst impacted industries with the largest gaps relative to pre-crisis levels of employment.#JobsReport #JobsDay 4/ pic.twitter.com/THU11R5wXM

Avg hourly earnings for production & nonsupervisory workers in leisure & hospitality are rising rapidly, continuing to accelerate into May in the clearest evidence of ongoing labor shortages and employers offering higher pay to attract workers#JobsReport #JobsDay 7/ pic.twitter.com/ceH4GkbaA7

4.33pm BST

The headline number likely understates wage growth because of composition effects (many leisure and hospitality workers hired, brining down the average). When I adjust for industry composition I get 1.4% in April/May, a 7.4% annual rate.

4.15pm BST

Michelle Meyer, head of U.S. economics at Bank of America Corp, warns that shortages of parts and labor held back job growth in May.

So while hiring did accelerate as the jobs market strengthened, with payrolls increasing by 559,000 last month after a revised 278,000 gain in April, it was below Wall Street forecasts of around 650,000 extra hires.

On the surface, yes, the jobs numbers were strong, a half million jobs is obviously a good thing, but given where we are in the economy, all else equal it could have been stronger,"

The fact that it wasn't is likely a function in large part to supply constraints and labor shortages."

4.01pm BST

Marty Walsh, US Secretary of Labor, says there are good, positive signs' in today's jobs report.

Walsh told CNBC that the light at the end of the tunnel is starting to get larger, pointing to the job gains in hospitality and education.

This is a good solid report...and we need to continue making gains like this.

"You can't just flip a switch and get it back on, but there are a lot of good signs." Labor Secretary @SecMartyWalsh reacts to May's job report. https://t.co/KEjKVUsEpi pic.twitter.com/YEA6PgfKbr

3.27pm BST

The US added 559,000 jobs in May as the coronavirus pandemic receded, shaking off fears of a substantial slowdown in hiring after April's disappointing monthly report.

The Bureau of Labor Statistics said Friday that the unemployment rate had fallen to 5.8% from 6.1% in April, still significantly higher than the 3.8% unemployment rate recorded in February 2020 before Covid 19 hit the US but less than half its 14.8% peak in April last year.

3.14pm BST

Ben Casselman of the New York Times has written a really interesting Twitter thread, highlighting some key points from the US jobs report:

Job growth picked up in May, but was still weaker than in March. Big-picture, we're still down 7.6 million jobs from before the pandemic. pic.twitter.com/0ra68BSOsV

Remote work continuing to fall as more offices reopen. 16.6% of workers were remote in May, down from peak of 35.4%. 30% of professional workers, down from 57.4%. pic.twitter.com/PVWa2ORd4i

The number of workers reporting that they are on temporary layoff fell below 2 million for the first time since the pandemic began. Permanent layoffs also falling, but more slowly. pic.twitter.com/BWOvg3G6JU

Hourly earnings growth in leisure and hospitality (nonsupervisory) remained high in May, but came back down to earth a bit (this chart shows three-month change, but one-month slowdown even more significant). pic.twitter.com/hvFPb0J279

But note that hourly pay in leisure and hospitality is now running above its pre-Covid trend. Wouldn't make too much of one month of data, but if that continues, it's notable.
(More on wages from me and @jeannasmialek in today's print edition: https://t.co/vqpLKka4oJ) pic.twitter.com/I427Na1aal

The official unemployment rate fell to 5.8% in May. Adjusting for misclassification and labor force exits (roughly what the Fed has recently been discussing lately), unemployment was 8.7%, down just a tick from April. pic.twitter.com/PvIcdvRCMY

Labor force participation was down slightly overall last month, and flat for prime-age (25-54) workers. That's pretty disappointing given the hole we're in pic.twitter.com/8Vkz6KfYgb

Notably, participation among prime-age women actually ticked down last month. Monthly data bounce around, so wouldn't read too much into that, but the bigger picture is clear: Women left the labor force in greater numbers during the pandemic and have made little recent progress. pic.twitter.com/HevAhVw80x

2.55pm BST

The US dollar has lost ground following the jobs report.

That also suggests traders are more confident that the Federal Reserve won't tighten its bond-buying stimulus program soon, with employment gains below forecasts.

THE DOLLAR INDEX EXTENDS ITS DECLINE AS THE $EURUSD CLIMBS CLOSE TO 0.4%. THE WEAKER THAN EXPECTED NFP REPORT SEEMS TO HAVE REINFORCED THE IDEA THAT THE FED WILL BE PATIENT #TRADING $DXY $USD

Disappointing #NFP slaps dollar lower, underpins #gold and stocks https://t.co/9PNfIWygUW ^FR pic.twitter.com/sR2RlibiQU

2.51pm BST

Tech stocks, which are sensitive to interest rate concerns, are leading the risers on the Dow.

Intel (+1.4%), Microsoft (+1.36%), Salesforce.com (+1.2%) and Apple (+1%) are all rallying following the jobs report.

2.47pm BST

The US stock market has opened higher, as Wall Street traders welcome today's Non-Farm Payroll report.

The 292,000 increase in leisure and hospitality jobs shows that the economy is recovering.

Another weaker than expected payrolls number is allowing investors to relax a little about the prospect of Fed tightening, while still demonstrating that the hardest hit sectors of the labour market are bouncing back.

This goldilocks scenario of a labour market recovery that is not too cold to raise concerns about the economy, but not too hot to prompt fears about faster than expected monetary policy tightening, is supportive of equity markets."

2.30pm BST

Adding over half a million new jobs would be amazing' in a normal month, says Paul Ashworth of Capital Economics. But these are not normal times....and job creation is slower than hoped.

The 559,000 gain in non-farm payrolls in May was at least an improvement on the 278,000 gain in April but, with the level of employment still 7.6 million below its pre-pandemic peak, it would take more than 12 months at that pace to fully eradicate the shortfall. Only a few months ago we had expected to see several months' worth of gains north of one million as the economy reopened, but labour supply is bouncing back much more slowly than demand....

Overall, in any other set of circumstances, monthly gains in excess of half a million would be amazing but, with a 7.6 million shortfall, it will be some time at that pace before the Fed's substantial further progress" has been met.

The May jobs report was a major improvement over April's, but we're still not in full-speed-ahead mode, despite plummeting COVID-19 cases.

That the economy is reopening was evident in the near 300,000-job increases in leisure and hospitality, which account for half the total increase. Also significant: the high numbers of teachers and childcare workers hired back. This should have a multiplier effect on jobs in the coming months, as working parents who needed to stop or curtail working due to kids at home can resume their careers.

Following the big disappointment in the payroll data last month, today's non-farm payroll release was closely watched, as investors assess whether the factors that limited job creation last month would be temporary or have persisted. In the end, the number bounced a bit less than expected, and there were no material revisions to last month's number.

It seems that some of the factors that weighed on the numbers last month are slowly easing, and that there continues to a be a slow but gradual return of workers to the labour market, but slower than expected. In our view, unemployment remains too high for a broad-based wage spiral to develop.

2.23pm BST

Average hourly earnings in the US continue to rise last month, up around 0.5%, which may indicate that some firms are lifting pay to attract workers.

That includes a rise in average hourly pay at leisure and hospitality firms (from $17.86 in April to $18.09 in May), where there have been reports of staff shortages.

Average hourly earnings for all employees on private nonfarm payrolls increased by 15 cents to $30.33 in May, following an increase of 21 cents in April. Average hourly earnings of private-sector production and nonsupervisory employees rose by 14 cents to $25.60 in May, following an increase of 19 cents in April.

The data for the last 2 months suggest that the rising demand for labor associated with the recovery from the pandemic may have put upward pressure on wages. However, because average hourly earnings vary widely across industries, the large employment fluctuations since February 2020 complicate the analysis of recent trends in average hourly earning.

Between March and May, average hourly earnings for private sector workers ($30.33) up 1.2%. For For leisure and hospitality, up 2.8% (to $18.09) https://t.co/w9LNNforRZ Table B-3

2.06pm BST

More than half the 559,000 new jobs created in May were in the leisure and hospitality trade, where payrolls swelled by 292,000 as people flocked to bars and restaurants.

Nearly two-thirds of the increase was in food services and drinking places (+186,000), with another 58,000 new jobs in amusements, gambling, and recreation, and 35,000 in accommodation.

Hard to construct stuff without construction materials https://t.co/0VfWm2f7m1

Big job gains in hospitality & education --> a clear sign of return to in-person activities.

Hospitality: +292,000
Education (public+private): +144,000
Healthcare: +46,000
Manufacturing: +23,000
Warehouse: +23,000
Temp help: +4,000

Oddly, construction LOST 20,000 jobs in May

1.54pm BST

Although below expectations, May's job growth is an improvement on April's weak payroll report.

Zach Moller of Third Way Economic says there is steady improvement", thanks to the Covid-19 vaccine rollouts.

Today's report continues to show steady improvement in the labor market. https://t.co/JMuht4GK3Y

But we haven't crushed the pandemic economy yet.

"The labor force participation rate was little changed at 61.6 percent in May ... The participation rate is 1.7 percentage points lower than in February 2020. "

If we can get those shots in arms we can truly recover. But the effect of the pandemic is still being felt https://t.co/HC4JUWehwz

1.49pm BST

The US unemployment rate has fallen to 5.8%, from 6.1%, the jobs report shows.

That's partly thanks to firms taking on another 559,000 staff last month, helping to bring more people back into work.

In May, the unemployment rate declined by 0.3 percentage point to 5.8%, and the number of unemployed persons fell by 496,000 to 9.3 million.

These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the coronavirus (COVID-19) pandemic (3.5 percent and 5.7 million, respectively.

The #JobsReport numbers are out with 559K jobs added in May, the unemployment rate ticked down to 5.8%, and the labor participation rate decreased to 61.6%. pic.twitter.com/59bDPzVtll

1.39pm BST

Just in: The US economy added 559,000 jobs in May, as hiring falls below expectations for the second month in a row.

Economists had expected around 650,000 new workers to be taken on last month, as the economy expanded strongly.

Oh my

*U.S. MAY PAYROLLS INCREASE 559,000; EST. 675,000

Labor force participation rate dips to 61.6%

April revisions were barely anything. To +278,000 from +266,000

Latest US Nonfarm Payroll Ranges #NFP pic.twitter.com/6XN9SB4Acz

1.24pm BST

Here's our news story on the surge in UK construction growth...and costs... last month.

1.23pm BST

Trade news: The United Kingdom has secured a new trade deal with Norway, Iceland and Liechtenstein.

The deal cuts tariffs on some agricultural goods such as UK cheese exports to Norway, along with tariff reductions and quotas on pork, and poultry. UK wines and spirits including Scotch Whisky will also now be recognised in Norway and Iceland, the Department for International Trade says.

However, the Norwegian government said the deal with the UK would not restore all the advantages it had when both countries were in the EEA.

Prior to the UK's exit from the EU, Norway enjoyed free movement of goods, services, capital and persons to the UK through the EEA agreement," it said.

Today's deal will be a major boost for our trade with Norway, Iceland and Liechtenstein, growing an economic relationship already worth 21.6bn, while supporting jobs and prosperity in all four nations at home.

Having had a quick glance this is a pretty bog standard Free Trade Agreement, with some level of tariff reduction and other preferential access against WTO terms, but obviously nothing like the previous seamless trade under a single market (agriculture aside). https://t.co/WaNGrDxKPB

Of course Norway happy to sign trade deal with UK.
2019 UK exports to Norway US$5.28.
Norway exports to UK US$ 20.95.
Not clear if this massive trade deficit with Norway will be reduced @pmdfoster @SamuelMarcLowe @DavidHenigUK @EmilyThornberry

1.00pm BST

It may be too early for a tipple.. but those with a taste for wine may be interested in a new fund-raising drive from English winemaker Chapel Down.

Chapel Down is asking the public to take part in a fresh funding round worth up to 7m that will help the business expand its vineyard in the North Downs and ramp up exports.

It is the Kent company's latest attempt to tap into investor enthusiasm for homegrown tipples as the democratisation of shareholding grows.

12.53pm BST

A virtual GP appointments app used by the NHS has announced a 3bn US stock market listing after agreeing to a blank-cheque company merger that will net its British-Iranian founder almost 1bn.

Babylon's reverse merger with Alkuri Global, a New York-listed special-purpose acquisition company (Spac), makes it the latest firm to take advantage of a growing Spac trend that makes it cheaper for private companies to go public.

12.24pm BST

The Financial Times explains that regulators in Brussels and the UK have launched a joint assault" on Facebook's use of customer data to dominate in core markets such as digital advertising.

The Wall Street Journal say the moves are ramping up regulatory scrutiny for the company in Europe", adding:

Both the European Commission-the EU's top antitrust enforcer-and the U.K.'s Competition and Markets Authority said Friday they are investigating whether Facebook repurposes data it gathers from advertisers who buy ads in order to give illegal advantages to its own services, including its Marketplace online flea market.

The European Commission said it will investigate whether Facebook misuses a trove of data gathered from advertisers to compete against them in classified ads. It will also check if the company unfairly ties its Marketplace small ad service to the social network.

Friday's move by the EU is the first time it's escalated a case into Facebook's behavior beyond the preliminary stages. It follows other high-profile cases targeting Google, Apple Inc. and Amazon.com Inc. The EU previously fined Facebook for failing to provide correct information in the merger review of the WhatsApp takeover.

12.23pm BST

Although the two investigations are separate, they were announced at the same time this morning.

And both the UK's CMA and the EC says they will seek to work closely" together as these independent inquiries develop.

12.18pm BST

Facebook says it will cooperate fully with both the EU and UK investigations to demonstrate that they are without merit".

The social network giant explains:

Marketplace and Dating offer people more choices, and both products operate in highly competitive environment with many large incumbents".

We will continue to co-operate fully with the investigations to demonstrate that they are without merit."

11.26am BST

Competition regulators in the UK and European Union have both launched investigations into Facebook, examining whether the social media giant is breaking competition rules.

We intend to thoroughly investigate Facebook's use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors.

Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice.

We're investigating whether Facebook is abusing a dominant position in the social media or digital advertising markets through its collection and use of ad data.

Read more https://t.co/GjBKfHphov pic.twitter.com/BT0TN9xkl8

Following a preliminary investigation, the Commission has concerns that Facebook may distort competition for the online classified ads services. In particular, Facebook might make use of the data obtained from competing providers in the context of their advertising on Facebook's social network, to help Facebook Marketplace outcompete them.

Facebook could, for instance, receive precise information on users' preferences from its competitors' advertisement activities and use such data in order to adapt Facebook Marketplace

Facebook is used by almost 3 billion people on a monthly basis and almost 7 million firms advertise on Facebook in total. Facebook collects vast troves of data on the activities of users of its social network and beyond, enabling it to target specific customer groups.

We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data.

#EUAntitrust Commission opens investigation into possible anticompetitive conduct of Facebook https://t.co/2JhhfZAh7i pic.twitter.com/PjV3pwmwBj

10.52am BST

Economist Richard Ramsey is also struck by the surge in construction costs - both for materials, and subcontractors:

UK construction PMI for May reveals a familiar story. Rapid growth in output and orders but accelerating inflationary pressures. Output hits 64.2 (highest since Sep-14). New orders hit a record high 68.8. But input cost inflation hits 94.7!! a record high.

Suppliers delivery times continue to lengthen with the supply chain disruption in May only marginally better than last April 2020 (lockdown 1.0).

Rates charged by subcontractors also rose at a record rate in May (70.8).

10.50am BST

The UK building boom means that finding skilled construction workers is a real problem, says Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply:

The construction sector continued its expansion programme with a phenomenal acceleration in growth and the strongest for seven years as new orders filled in at the fastest rate for almost a quarter of a century.

Residential work was back in the top spot as house building rose at the quickest pace since August 2014, serving as an antidote to the recent scarcity in housing for lets or buy, and driven by consumer demand and a boost from the stamp duty holiday.

10.48am BST

This chart, from the PMI report, shows just how badly supply chains are creaking:

10.24am BST

UK building firms are hiring new staff at the fastest rate in seven years, to handle the surge in demand in May.

New project starts and a sustained recovery in construction workloads resulted in the biggest jump in staffing numbers since July 2014, the PMI report shows.

10.18am BST

UK construction has recorded its fastest growth in almost seven years, fuelled by the biggest jump in new orders since at least April 1997.

There were widespread reports citing shortages of construction materials and wait times from suppliers lengthened considerably in comparison to those seen during April.

Imbalanced supply and demand led to survey record increases in both purchasing prices and rates charged by sub-contractors.

9.57am BST

UK car sales continued to recover from their pandemic lows last month, but remain below their pre-Covid level.

With dealerships back open and a brighter, sunnier, economic outlook, May's registrations are as good as could reasonably be expected. Increased business confidence is driving the recovery, something that needs to be maintained and translated in private consumer demand as the economy emerges from pandemic support measures.

Demand for electrified vehicles is helping encourage people into showrooms, but for these technologies to surpass their fossil-fuelled equivalents, a long term strategy for market transition and infrastructure investment is required."

Business confidence drives cautious recovery in new car registrationshttps://t.co/xHi6XDdMMA pic.twitter.com/YfDsEdAFB3

9.38am BST

The Covid-19 restrictions on touring and performing are also encouraging artists to cash in the value of their music rights, points out John Coldham, IP partner at law firm, Gowling WLG.

Here's his take on the sale of Joel Little's song catalogue to Hipgnosis:

The trend to buy up the rights to songs continues, with this latest investment being a continuation of that.

There is nothing new about rights to creative works being bought and sold, but it is interesting that, as the world evolves into digital streaming, there has been a spate of such high profile sales recently. It is likely that some artists wish to realise the value of their catalogue now, rather than wait for the trickle of streaming revenues to come in, especially as they are not able to perform live so easily in the present environment.

9.31am BST

Music news: Grammy Award-winning songwriter, producer and musician Joel Little has become the latest musician to sell their works to Hipgnosis Songs Fund.

Little has worked with several leading musicians - including Taylor Swift, and Lorde, co-writing and producing her debut EP and her first album, Pure Heroine'.

Joel Little, Lorde and Taylor Swift Hitmaker, Sells Songwriter Catalog to Hipgnosis https://t.co/Ij6lN7cItg pic.twitter.com/XldpzzwZyD

Little, whose songs Hipgnosis says have been streamed over 15 billion times, co-wrote and produced four songs on Swift's 2019 album Lover," including Me!" and The Man".

He has also collaborated with U.S. R&B singer Khalid, and in 2014 won a Grammy award with New Zealand singer Lorde after co-producing and writing Royals". In 2014 Little co-wrote or produced songs for the The Hunger Games: Mockingjay, Part 1" movie.

9.16am BST

With airlines under pressure, the London stock market is effectively becalmed this morning.

The FTSE 100 index has dropped by 10 points, or 0.15%, to 7054 points while the more UK-focused FTSE 250 is flat.

Analysts' estimates have the nonfarm number climbing to 645,000 [from 266k in April], with the unemployment rate falling from 6.1% to 5.9%. Average hourly earnings are, as ever, the one outlier, with expectations of 0.2% against the previous month's 0.7%.

Considering that nonfarm forecast lies somewhere between the levels expected last month, and the number produced last month, it will be interesting to see how investors react. It might hit that sweet spot - strong enough to point to a continuing recovery, but not strong enough to prompt any action from the Fed.

9.11am BST

Although the travel sector is clearly struggling, the wider UK economy is rebounding from the pandemic.

Overnight, a survey has shown that British employers took on permanent staff last month at the fastest rate since at least the late 1990s.

We now have a consistent picture over the past few months to show that confidence is growing and hiring plans are in motion."

With demand spiking, the skills and labour shortages that already existed in the UK have come into sharper focus - and COVID has only made them worse."

KPMG/REC UK Report on #Jobs shows further rapid increases in recruitment in May, with lack of candidates adding to upward pressure on starting pay...

...good news on #unemployment, not so good (depending on your point of view) on #inflation
https://t.co/D4XSSm8qCA pic.twitter.com/dUvRyVKSio

9.00am BST

AJ Bell financial analyst Danni Hewson says the UK's new tighter travel restrictions are causing aftershocks' in the travel sector today:

The travel sector continued to see aftershocks from yesterday's earthquake decision to remove Portugal from the green list of travel destinations from the UK. Hopes of anything approaching a normal summer for the industry now look pretty much over.

Domestically the hospitality sector will be hoping that a full reopening is still on the cards for the 21 June but creeping concern about the threat posed by the Delta variant may send any decision on this to the wire - which is clearly exceptionally unhelpful for businesses."

8.57am BST

8.40am BST

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

The government has torn up its own rulebook and ignored the science, throwing people's plans into chaos, with virtually no notice or alternative options for travel from the UK. This decision essentially cuts the UK off from the rest of the world."

This news today is further evidence of the instability facing the aviation industry this summer. With government advice shifting regularly it is imperative that proper financial support for the sector is put in place.

Even in the most optimistic scenario, we now face losing half of the summer before holidaymakers can confidently book travel to major destinations, and the nearer we get to the school holidays the more likely they will be to just stay at home.

The government starts phasing out its lifeline furlough scheme in four weeks' time which is only adding to the damaging uncertainty facing aviation.

Ministers need to make clear that further support will be available to support jobs while restrictions on tourist travel remain in place. Without this, there's a risk that the industry will no longer be there when restrictions are lifted."

The narrative in the markets has been dominated by the risk of high inflation becoming a collateral effect of the ongoing gargantuan stimulus. The Fed has, so far, refused to blink, insisting that any spikes in prices are likely to be temporary and that bringing forward the tapering could damage the economic recovery.

Amidst this tug-of-war, employment is likely to become a decisive factor, with a high reading having the potential to force the Fed to start thinking about tapering its current monetary and asset purchase policies. Looking at today's dollar gains, it appears that many investors are already positioning themselves for such a scenario.

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