UK workers are flocking back into the labor market at the fastest pace since the pandemic began as the cost of living crisis takes its toll. The Covid outbreak sparked a wave of people leaving the workforce, sparking widespread labor shortages that have plagued the economy ever since. However, the number of economically inactive people fell by 0.4 percentage points – or 144,000 between March and May – the biggest drop since the start of the pandemic. Employment increased by 296,000. It comes as rising inflation puts increasing pressure on household budgets, with real wages still falling at the fastest rate on record. Adjusted for inflation, regular pay excluding bonuses fell 2.8% between March and May – the biggest drop since records began in 2001. Including bonuses, workers were still worse off by 0 .9%. Inflation is currently at a 40-year high of 9.1% and is expected to rise further when the latest figures are released tomorrow, before peaking above 11% later in the year.

5 things to start your day

  1. Andrew Bailey fights to protect empire as Tory criticism builds Bank of England faces biggest challenge since independence amid pressure for reforms
  2. ‘Slasher’ airlines’ low pay led to travel chaos, Heathrow boss says Plus: Airlines to blame for travel chaos by not paying baggage handlers
  3. Gen Z drives £25bn plunge in spending as income shock hits Younger generations more likely to cut back on groceries, clothes and going out than Boomers
  4. Tory Party members don’t care about net zero target ‘because 90% will be dead by 2050’ Conservative MP Chris Skidmore says climate change fight requires more urgent timetable
  5. Millions of pounds needed to meet UK heat pump targets, National Grid warns ‘Insufficient incentives’ threaten 600,000 a year installation target

What happened in the night

Shares were lower in Hong Kong this morning, with the Hang Seng index down 0.6%. The Shanghai Composite rose, while the Shenzhen Composite on China’s second bourse also rose. Tokyo stocks opened higher, with the Nikkei 225 up 0.7% in early trade.

It’s coming today

Economy: Unemployment rate (UK), applicant count rate (UK), average earnings (UK), inflation (EU), ECB survey on bank lending (EU), building permits (US), housing starts (US) ) Corporate: BHP, IntegraFin Holdings (transaction update)