That’s all for today – here’s the main stories:
Growth across the UK economy has hit a six-month low, as supply problems and staff shortages hold back the recovery.
Service sector firms and manufacturers reported that problems hiring staff or obtaining raw materials worsened in August, according to the closely watched PMI survey.
My colleague Richard Partington explains:
Britain’s economic recovery from lockdown has slowed sharply in the past month despite the removal of most remaining pandemic restrictions, as businesses suffered the worst shortages of workers and materials in decades.
The latest snapshot from IHS Markit and the Chartered Institute of Procurement and Supply (Cips) showed that growth in private sector output slowed to a six-month low in August.
Problems with hiring workers and shortages of materials were 14 times higher than usual, and the worst since the survey of business activity began in January 1998.
A separate survey from the CBI found that factory shortages are at record levels (since 1977), with plastics and electronic components in particularly short supply.
Our economics editor Larry Elliott warns that conditions could worsen:
It is a classic double whammy. On the one hand, businesses are being forced to pay higher wages to plug labour shortages. On the other, demand is starting to ease. The economy will continue to grow at a fair lick in the third quarter of 2021 but at a much less rapid pace than the 4.8% seen in the second quarter.
That double whammy could easily become a triple whammy if the economy struggles to cope with the withdrawal of government support. Rishi Sunak has no intention of scrapping his plan to wind up the furlough scheme next month and sees no reason why he should, given record job vacancies.
But it is easy enough to envisage a scenario in which consumers decide eating out or a visit to the cinema is not worth the risk, especially with firms jacking up their prices to cover higher wage costs. Britain’s bout of mini-stagflation will probably get worse before it gets better.
Desperate UK food manufacturers are pleading with the government to be able to call upon prisoners to solve the labour crisis:
Britain isn’t alone, though.
Growth at US companies has hit an eight month low, with firms blaming material shortages, difficulties hiring new staff and the spread of the Delta variant.
The news lifted the US markets, and kept the dollar weaker, as concerns that the US Federal Reserve could start tapering its stimulus programme soon eased.
The pandemic also hit growth in Asia-Pacific markets, with Australia and Japan both suffering private sector contractions as lockdowns hurt businesses, but the eurozone is enjoying a stronger month.
Read More: UK and US private sector growth hit by Delta variant and shortages – as it