Right, time to wrap up...

The takeover battles for supermarket chain Morrisons and aerospace group Meggitt means both companies are to join the FTSE 100, in the latest reshuffle of the UK stock market announced tonight.

The Bank of England has appointed another Goldman Sachs alumnus to a top job at the central bank, with Huw Pill succeeding Andy Haldane as its chief economist.

The Opec+ group has agreed to continue with its policy of gradually increasing oil output, despite revising its 2022 demand outlook upwards and facing U.S. pressure to raise production more quickly.

Global manufacturing growth has slowed to its slowest rate in six months, as supplier delays, rising raw material costs and staff shortages all inhibit output. Growth was still robust in many countries in August, though, despite a slowdown in output and new order growth and wide-ranging supply chain problems.

In the UK, factories were forced to hike their prices in response to a near-record jump in input costs, as supply chain problems hit the sector.

Economists warned that lorry driver shortages, Covid-19 outbreaks and shortage of parts are all biting, with smaller firms most at risk.

Pub chain Wetherspoons is feeling the impact - running short of some beer brands, including Carling, Coors and Heineken.

Plus, there are signs that driver shortages and the costs of Brexit-induced red tape are beginning to hit household budgets, with shop prices rising....

Stratford-upon-Avon is reviving a traditional recruitment drive dating from medieval times to help ease the modern squeeze on hospitality workers in the region.

The Warwickshire town, Shakespeare’s birthplace, is launching the job and apprenticeship event in conjunction with its annual October funfair, which is known as the “mop fair” .

Eurozone factories also saw growth hit a six-month low, although unemployment in the euro area also fell as more than 300,000 people found jobs in July.

The day began with an unexpected surge UK house prices - up 2.1% in August, the second largest monthly surge in 15 years.

This added almost £5,000 to the average property as the property market continued to boom after the partial end to the government’s stamp duty holiday in England and Northern Ireland.

The Financial Reporting Council has issued a formal complaint against KPMG and several of its current and former employees for allegedly providing “false and misleading information” relating to its audits of the outsourcing firms Carillion and Regenersis.

Google is appealing against a €500m (£430m) fine imposed by France’s antitrust watchdog after a dispute with local media about paying for news content.

Workers at the GKN automotive engineering plant in Birmingham have voted to strike in a campaign to prevent the factory’s closure.

The employees voted overwhelmingly for action to save the plant and more than 500 skilled jobs. Some of the work carried out in Birmingham is set to be transferred overseas to other GKN plants.

The owner of Port Talbot steelworks has crashed to a £347m annual loss as the pandemic hit demand, but insisted its finances are healthier after its parent, Tata, pumped in almost £1bn of equity.

And a surge in spending on leisure, entertainment and eating out in the UK made the August bank holiday the busiest for consumer activity since the pre-pandemic Christmas of 2019.

Barclaycard data showed individuals were undeterred by weather that felt like autumn and rising Covid-19 infections, with transactions 14.4% up on the same long weekend in 2020 and 9.4% higher than in 2019.

Goodnight... GW

Some late news: supermarket chain Morrisons and aerospace engineering firm Meggitt are both being promoted to the FTSE 100 index.

The two takeover targets are being lifted to the blue-chip index in the latest quarterly review of the UK market, up from the smaller FTSE 250 index.

It follows the surge in Morrisons and Meggitt’s share prices since they each attracted takeover bids, which means they are now worth enough to qualify for inclusion in the FTSE 100.

However, their return could be short-lived, as both companies would be delisted from the stock market if the takeovers go ahead.

FTSE Russell, the London Stock Exchange Group subsidiary which handles index changes, says:

The rules-driven, impartial quarterly reviews ensure the indexes continue to portray an accurate reflection of the market they represent and form an essential component to the management of the indexes.

Making way are Just Eat Takeaway, the food delivery firm, and engineering firm Weir Group -- to ensure that the ‘Footsie’ still includes 100 companies.

Weir was the lowest ranked FTSE 100 company on market capitalisation, at around £4.5bn, so will fall into the FTSE 250 index.

Just Eat is being removed because FTSE Russell has decided that it is a Dutch firm rather than a British one, following its recent merger with Dutch competitor Takeaway.com.

Broadcaster ITV has avoided the cut, though. It will stay in the FTSE 100, having been seen as potentially vulnerable to demotion last week.

The changes will be implemented at the close of business on Friday, 17 September, and take effect from the start of trading the following Monday.

Morrisons value has surged around 60% so far this year to £7bn, following the takeover battle between private equity groups CD&R and Fortress.

Meggitt’s value has jumped almost 80% during 2021 to £6.5bn, amid a tussle between US defense groups TransDigm and Parker Hannifin.

Just Eat’s ejection means the FTSE 100 is losing one of its few tech stars, Bloomberg explains:

FTSE Russell classified Just Eat Takeaway as British after the 2020 combination of Britain’s Just Eat and Dutch competitor Takeaway.com, making it eligible for the FTSE, because the company had said it would delist its stock from Euronext Amsterdam. Just Eat Takeaway backtracked on that earlier this year, prompting FTSE Russell to change the company’s assigned nationality to Dutch last month

The ouster means the FTSE 100’s already-low technology weighting will shrink even further. Technology stocks account for only 1.8% of the index, versus about 30% for the S&P 500 Index in the U.S.

“It’s a shame for the FTSE 100 to have to let go of that because it did bring attention to the index,” John Moore, head of trading at Berkeley Capital Wealth Management, said by phone, referring to Just Eat. “It doesn’t have many tech companies on there.”

Energy news: The Opec group and their allies have agreed to stick with their current plan to gradually increase oil output.

The decision, made at their virtual meeting today, means Opec+ will raise output by another 400,000 barrels per day in October, having already pledged to do so this month.

The group, which also revised its 2022 demand outlook upwards, said:

“While the effects of the COVID-19 pandemic continue to cast some uncertainty, market fundamentals have strengthened and OECD stocks continue to fall as the recovery accelerates.”

They plan to meet again on 4th October.

Opec+ has been gradually increasing its production output, having slashed output significantly early in the pandemic as demand slumped. They have stuck with their current plan despite pressure from the Biden White House to boost oil production, to curb rising fuel prices.

The finance minister of Iraq, one of the founding members of the global oil cartel Opec, made an unprecedented call to fellow oil producers to move away from fossil fuel dependency and into renewable energy.

Ali Allawi, who is also the deputy prime minister of Iraq, has written in the Guardian to urge oil producers to pursue “an economic renewal focused on environmentally sound policies and technologies” that would include solar power and potentially nuclear reactors, and reduce their dependency on fossil fuel exports.

Huw Pill has been appointed to succeed Andy Haldane as the Bank of England’s chief economist, becoming the latest Goldman Sachs alumnus to fill a key role at Threadneedle Street, our economics editor Larry Elliott writes.

Despite reports that the Bank had been looking to increase its diversity by appointing a woman or someone from a minority ethnic background, it ended a lengthy selection process by announcing that Pill had been chosen and would take up the position next week.

The Bank had hired diversity consultants to help find a replacement for Haldane, who announced inApril that he was leaving to take over as the chief executive of the Royal Society of Arts thinktank.

But the appointment of Pill, a senior lecturer at the Harvard business school, means the Bank’s nine-strong monetary policy committee – which sets interest rates – remains all white and has just two women.

The job of chief economist is the one MPC post appointed by the Bank itself rather than by the Treasury, and the final selection from a shortlist was made by Threadneedle Street’s governor, Andrew Bailey, and one of his four deputies, Ben Broadbent, himself a former Goldman Sachs economist. Bailey’s predecessor as governor, Mark Carney, also worked for the US investment bank.

Less than two months ago Bailey pledged to do more to tackle systemic racial inequality after a hard-hitting review found the 327-year-old Bank of England was failing to do enough to promote diversity.

More here:

The upshot of all today’s manufacturing PMI reports is that growth across global factories has slowed to a six-month low.

Output and new order growth slowed in August, and “severe” supply chain disruption led to longer delays, raw material shortages, rising purchasing costs and a near record increase in selling prices.

But despite these challenges, manufacturers did post their 14th month of growth, with employment rising for the tenth month running.

Here’s the details:

The upturn in the global manufacturing sector lost further momentum during August, as rates of output growth decelerated in several major markets including the US and euro area and slipped into contraction (on average) in Asia.

The J.P.Morgan Global Manufacturing PMI™ – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – fell to a six-month low of 54.1 in August. This nonetheless extended the current sequence of improving operating conditions to 14 months.

Out of the 31 nations for which August data were available, 21 registered PMI readings above the neutral mark of 50.0 compared to ten signalling contraction (below 50.0). The slowdown was broad-based, however, with the PMI readings for 24 of the countries covered lower than in July.

Growth continued in many of the largest nations covered, including the US, Japan, Germany, the UK, France, India, South Korea and Brazil. In contrast, China, Russia and Mexico were among the nations recording a sub-50 reading.

Back to economic data... and US factories have also been battling supply chain problems and raw material shortages.

IHS Markit’s US manufacturing PMI has dipped to 61.1 in August, down from 63.4 in July -- which shows strong growth, but still a slowdown month-on-month.

Factories reported steep upturns in production and new orders last month, but the report also found that backlogs of work rose at a near-record rate. That indicates capacity constraints and material shortages are weighing on growth (as in the UK and the eurozone).

Siân Jones, Senior Economist at IHS Markit, explains:

“Not only were firms facing difficulties trying to clear outstanding work, they also faced further hikes in supplier costs. The pace of cost inflation exceeded the previous series record amid a pervasive scarcity of inputs. Favourable demand conditions allowed finished goods prices to also rise at an unprecedented rate, as firms sought to protect their margins.

Delivery times lengthened at the second-sharpest rate in over 14 years of data collection, with purchasing activity still rising markedly. It was not only producers who highlighted stockpiling, however, as reports of customers shoring up their holdings of finished items resulted in a substantial drop in post-production inventories.

Challenges rebuilding such stocks, including material and labour shortages, and everburgeoning levels of incomplete work are likely to remain a feature for some time to come.”

The Bank of England has appointed a former chief European economist at Goldman Sachs with lengthy previous experience at the European Central Bank, as its new chief economist.

Huw Pill will replace Andy Haldane, the outspoken and quotable former chief economist who left two months ago to join the Royal Society of Arts.

Pill is joining the Bank of England from Harvard Business School, where he has been senior lecturer since 2018. He had previously been chief European economist at Goldman Sachs, prior to which he held a series of senior posts at the European Central Bank.

Pill also has some experience of Threadneedle Street, having worked for the Bank as an economist between 1990 and 1992.

Pill says:

“It is a great privilege to rejoin the Bank and have the opportunity to contribute to the work of the MPC and the Bank more broadly at what remains a challenging time for monetary policy and central banking.”

Pill starts his role at the Bank of England next Monday, 6th September. He arrives at a time when the supply chain crisis is pushing up prices, with the Bank predicting that inflation will hit 4% by the end of this year, double its 2% target.

In another disappointment, US private firms hired just 374,000 more workers in August, far less than expected.

That’s according to the latest payroll figures from ADP, which suggests that the labor market could have been weaker than hoped this month as the delta variant hits the economy.

Economists had predicted a jump of 613,000 private sector payrolls this month, following two months of strong growth in the official Non-Farm Payroll figures (we get August’s NFP report on Friday).

Andrew Hunter, senior US Economist at Capital Economics, points out that this is an improvement on ADP’s July report, which only showed 326,000 new jobs - he still hopes for a solid Jobs report on Friday.

More generally, the ADP’s poor record in tracking the official figures means that we still expect a reasonably solid 750,000 increase in non-farm payrolls in the employment report due on Friday.

Admittedly, the details show that the slowdown in private employment growth over the past couple of months has been driven mainly by leisure & hospitality, education & health and “other services”, which would be consistent with the idea that rising virus fears are prompting consumers to avoid high-contact services again.

That said, the high-frequency activity indicators and the initial jobless claims data suggest there has only been a modest slowdown in the pace of recovery, although the sharp declines in measures of consumer confidence are a little more disconcerting.

Brazil’s economy contracted slightly in the three months to June, worse than expected, as the second wave of the pandemic stalled its recovery.

Brazil’s GDP fell by 0.1% in April-June, government statistics agency IBGE has reported. That misses forecasts of 0.2% growth, and following 1.2% growth in the first quarter of the year.

The setback for Brazil’s economic rebound came as a severe second wave of COVID-19 infections triggered restrictions in major cities during April and May, including including temporarily closing restaurants and other non-essential businesses.

The economy grew 12.4% over the last year, below the 12.8% rise economists had expected from a pandemic-hammered baseline.

Dow Jones newswires says Brazil’s economy suffered from supply problems and agriculture was hit by a decline in the coffee harvest.

The decline in industrial activity in the quarter was caused by the same serious supply problems that are affecting much of the rest of the world. Brazil’s industrial sector contracted 0.2% in the second quarter from the first and grew 17.8% from a year earlier, the IBGE said.

“The disappointing figure reflects to a large extent the issues that have plagued the industrial sector,” said Alberto Ramos, an economist at Goldman Sachs in New York. “In the auto industry, for example, there’s been a lack of microchips and parts, and a significant shock to costs.”

Agriculture declined 2.8% in the quarter and grew 1.3% from a year earlier, while services expanded 0.7% in the quarter and grew 10.8% from a year earlier. Gross fixed capital formation, a measure of investment, fell 3.6% from the first quarter and jumped 32.9% from the second quarter of 2020.

More here: Brazil 2Q GDP Contracted Slightly as Industry, Agriculture Shrank

Brazil also suffered a disastrous pandemic, with one expert warning that the country could have saved 400,000 lives if the country had implemented stricter social distancing measures and launched a vaccination programme earlier.

The Financial Reporting Council has issued a formal complaint against KPMG and several of its current and former employees for allegedly providing “false and misleading information” relating to its audits of the outsourcing firms Carillion and Regenersis.

The accounting watchdog’s allegations of misconduct relate to documents provided to the FRC during its inspection of audits carried out on Carillion in 2016 and Regenersis in 2014.

Carillion was one of the UK’s biggest construction contractors before it buckled under the pressure of £7bn of debt in January 2018, plunging 3,000 jobs into uncertainty and threatening more than 450 major public-sector projects, including the construction of new hospitals.

Here’s the full story:

Britons spent heavily over the bank holiday weekend, as people hit the shops, eateries and entertainment venues, new figures show.

The August bank holiday weekend was the busiest spending period since Christmas 2019, according to Barclaycard, which processes one in every three pounds spent on debit and credit cards in the UK.

Transaction volumes were 14.4% higher than during the bank holiday a year ago, and 9.4% higher than their pre-pandemic levels in 2019.

The Leisure and Entertainment sector was particularly busy - with 37% more transactions compared to last year, and almost 27% more than 2019.

Restaurants and pubs also saw a surge in business. Food & Drink sector transactions volumes jumped by a fifth year-on-year, and were 14.5% up on two years ago.

Rob Cameron, CEO of Barclaycard Payments, said:

“We haven’t seen transaction volumes like these since Christmas 2019, the last major shopping milestone before the pandemic.

This is hopefully a sign of more positive times to come, and a testament to the strength and resilience of British businesses when it comes to adapting and thriving in a post-lockdown world.

The Bank of England has estimated that more than £200bn in additional savings was built up, mainly by wealthier households, during lockdown, which could fuel the recovery.

Pub chain Wetherspoons has become the latest well-known business to suffer supply shortages, with some of its beers not available.

PA Media has the details:

Pub chain JD Wetherspoon has confirmed that supplies of Carling and Coors beer have become the latest casualty of the UK’s major supply chain issues, with some pubs not receiving planned deliveries.

Wetherspoon spokesman Eddie Gershon said:

“We are experiencing some supply problems with both Carling and Coors, which means that some pubs do not have the products available.

“We apologise to our customers for any inconvenience caused.

“We know that the brewers are trying to resolve the issue.”

Wetherspoons joins a growing list of high street names, with Nando’s, McDonald’s and Greggs all experiencing some shortages in recent weeks.

This crisis is partly due to EU HGV drivers leaving the UK after Brexit...which, of course, Wetherspoon’s chairman Tim Martin supported. Back in June, he urged the government to allow more migrants from the European Union to work in the UK through a “reasonably liberal immigration system”......

Here’s some reaction to the dip in UK factory growth last month.

Mike Thornton, partner and head of manufacturing at RSM UK, says lorry driver shortages, Covid-19 outbreaks and shortage of parts are all biting - and putting smaller factories at the greatest risk:

‘Supply chain disruption, material shortages and resource pressure hit the latest CIPS manufacturing PMI with another monthly fall from 60.4 in July, to a five-month low of 60.3 in August. The supply chain woes now go beyond a global shortage of semi-conductors, which is still having an acute impact on the sector; but other factors are at play. The shortage of lorry drivers across Europe and varying levels of vaccinations and Covid cases across the globe are also hitting logistics and supply chain management - stalling production even further.

‘Manufacturers will respond proactively by bulk buying to ensure they have a stock buffer to keep the production line moving, whilst buying before prices increase even further. However, it will be the bigger manufacturers that have the capital, scale and influence to compete effectively; and the smaller manufacturers further down the supply chain that will feel the pinch more prominently.

‘That said even larger players will not be immune to supply chain disruption this year; with Volkswagen, Toyota and Ford all recently announcing cuts to production - highlighting the scale and significance of the problem.’

Lee Collinson, head of manufacturing at Barclays, says manufacturers have “one arm tied behind their backs” by supply chain issues.

The upshot is that the zip we saw over the past few months has waned a little with higher raw material costs and longer delays impacting levels of growth in overall activity, bringing the Index down to its lowest level in five months.

That said, encouragingly, optimism in the sector remains high and manufacturing, for now, will focus on controlling costs and remaining flexible in its planning whilst demonstrating the resilience the sector is renowned for.”

Huw Howells, head of manufacturing and industrials at Lloyds Bank, argues that manufacturing is still performing very well, despite supply problems.

“Recovery is underpinned by continued new order growth while subsectors like commercial aerospace, which have been hit hard by the pandemic, are starting to demonstrate a lift in activity as airlines globally tool up to meet recovering passenger numbers.

“Where activity is being depressed compared to recent months, this is indicative of the continued materials and labour shortages that plagued the economy during August. These issues have lengthened lead times and increased costs for firms.

“The seasonally-adjusted index may, however, hide some added disruption from the post-lockdown summer. More people are taking longer holidays than they usually would, which we hear is delaying a good chunk of purchases in the sector.

UK factory output growth has slowed as manufacturers scramble to obtain raw materials and parts, pushing up the prices they charge.

The severe disruptions to UK supply chains caused by Covid-19 lockdowns and the knock-on effects of Brexit weighed on production growth last month.

That’s according to the latest survey of purchasing managers by data firm IHS Markit, which found that production, delivery and distribution schedules all experienced substantial delays in August.

The report found that UK manufacturing output rose again in August, but at the weakest extent since February, with firms still reporting solid gains in new orders and employment.

The ongoing shortages of components and commodities also forced manufacturers to pay higher input prices -- as inflationary pressures continued to build in the economy.

Manufacturers were able to pass some of those costs onto their own customers, with average selling prices rising at one of the quickest rates on record.

The supply chain crisis saw average supplier lead times lengthen to the second greatest extent in the survey history during August. The only time when delivery delays have been more pronounced was in April 2020 during the first COVID-19 lockdown.

Markit says:

Input shortages, shipping delays, a lack of port capacity, transportation issues, Brexit and shortages of logistic industry staff all contributed to delivery delays.

Business was brisk -- incoming new orders rose in August, from both domestic and overseas markets. On the export front, manufacturers reported increased orders from clients in Europe, China, the US, Asia and South America.

Employment growth was strong too, with staffing levels rising as factories try to boost capacity, meet rising demand requirements and tackle their backlogs of incomplete work.

However, some manufacturers reported skills shortages as they struggle to find workers.

The HS Markit / CIPS UK Manufacturing PMI, which tracks activity in the sector, dipped slightly to a five-month low of 60.3, slightly below July’s 60.4. That’s still above the 50-point mark showing stagnation - and is better than the ‘flash’ reading of 60.1.

Rob Dobson, director at IHS Markit, says this “severe disruptions” to supply chains and raw material shortages eroded the growth momentum of UK manufacturing.

“A wide range of factors contributed to the disruption, including port capacity issues, international shipping delays, the re-imposition of COVID restrictions at some key points in global supply networks and ongoing issues post-Brexit. With all of these factors likely to persist for the foreseeable future, manufacturing could well see a further growth slowdown in the coming months.

The impact of supply issues is also feeding through to rapid price inflation. Rates of increase in both input costs and selling prices remained close to record highs in August, as rising demand chased constrained supply and companies moved to pass on price increases to clients and consumers alike. This is affecting most markets, but especially autos, metals, food stuffs and electronics.

Dobson also warn that the supply chain crisis could hit employment growth.

“Business confidence remained elevated despite the widespread shortages as firms focused on the longer-term outlook and brought back furloughed workers. However, the solid jobs growth seen in August could soon wane if supply disruptions and shortages of both labour and required skills continue to worsen.”

Eurozone manufacturing growth has slowed to a six-month low in August as supply chain problems hit factories, according to data firm IHS Markit.

Its latest survey of purchasing managers across the euro area shows that growth in output and new orders slowed last month, while inflationary pressures remained strong.

The sector still posted strong growth - although not as rapid as this summer. The final Eurozone Manufacturing PMI came in at 61.4, down from July’s 62.8.

Chris Williamson, Chief Business Economist at IHS Markit explains:

“Eurozone manufacturers reported another month of buoyant production in August, continuing the growth spurt into its fourteenth successive month. The overriding issue was again a lack of components, however, with suppliers either unable to produce enough parts or are facing a lack of shipping capacity to meet logistics demand.

These supply issues were the primary cause of a shortfall of manufacturing production relative to orders of a magnitude not previously recorded by the survey, surpassing the 24-year record deficit seen in July.

Factory selling prices consequently rose steeply once again, albeit with some of the upward pressure alleviated by a slight cooling of input cost inflation, albeit with still-high materials prices adding to manufacturers’ problems.

Employment growth meanwhile eased only modestly from July’s all-time high as producers remained focused on boosting operating capacity. However, a dip in future sentiment in August – linked to the peaking of demand, persistent supply chain issues and the spread of Delta variant – add to signs that both output and employment growth has peaked.”

This follows a slowdown in Asia-Pacific factories -- with China’s manufacturing entering contraction, according to the Caixin PMI report earlier today.

In the City, stocks have begun September with some solid gains.

The FTSE 100 index of blue-chip shares has jumped 0.9%, or 65 points, to 7185 points, a two-week high. Food delivery operator Just Eat Takeaway are the top riser (+2.6%), along with conference organiser Informa (+2.4%) and retailer JD Sports (+2.4%).

The smaller, more UK-focused FTSE 250 index has hit a new all-time high over 24,214, up 0.5% today as it continues its rally.

Travel and hospitality stocks are picking up too, with cinema chain Cineworld (+2.9%), easyJet (+2%) and Wizz Air (+2.1%) gaining.

Hopes of a recovery from the pandemic have been driving the markets steadily higher. But as Ipek Ozkardeskaya, senior analyst at Swissquote points out, we face plenty of problems too:

Corporate results are strong, but the Covid crisis is not over, the world and the US is dealing with the new delta variant, global inflation spikes, there is a worsening chip and other material shortages which will at some point affect companies’ businesses and the high inflation is now driving the Federal Reserve toward the exit of the cheap money era.

Add that to the tragedy in Afghanistan, storms and forest fires: the world is not doing well.

August’s house price rally shows that the market didn’t need chancellor Rishi Sunak’s stamp duty holiday, argues Lucy Pendleton of independent estate agents James Pendleton.

She says:

“This is a timely lesson that it’s the fundamentals of the market that are all-powerful still. Sunak’s generous state handout has turned out to be more a demonstration of misdirection than crisis management.

“The market didn’t need his money and, with hundreds of billions tucked away in accidental savings, Britons are continuing to satisfy a deep-seated determination to move after a traumatic 18 months.

“First-time buyers have had their patience sorely tested and are now being pulled back into the frenzy in increasing numbers. Where, once, most of them would have bet on the market cooling and giving them a chance to seek better value, fears that rising inflation will put a protective arm around this bull run are cutting down those numbers.

This readout for August has relegated a strategy of ‘wait-and-see’ to wishful thinking.”

Last month, the Resolution Foundation think tank argued that the stamp duty holiday had been ‘both expensive and unnecessary’, as low interest rates, higher savings rates, the desire for more space and the move into more rural locations would have supported the market anyway.

Martin Beck, senior economic advisor to the EY ITEM Club, says some homebuyers were keen to take advantage of the smaller stamp duty savings still on offer in England and Northern Ireland:

“Although the temporary stamp duty saving introduced last year was decreased on 30 June, the nil-rate threshold will not return to the original £125,000 level until 1 October. So buyers lining up transactions and seeking to benefit from a lower tax bill before the October deadline may have supported demand and prices in August.

But other factors also drove up prices, including demand for properties better suited to a world of home, or hybrid, working.

Consumer confidence has remained high and buyers have continued to benefit from ultra-low mortgage rates. Meanwhile, the pandemic has had what will likely be long-lasting effects on property preferences, including raising demand for larger homes in a world of more home working.

Combined with the fuel for property deposits provided by the substantial savings accumulated by some households during lockdowns, there are plenty of props supporting the housing market.

So are house prices likely to tumble soon? Beck thinks not, even though the forces affecting the housing market are not all positive.

On measures such as the ratio of house prices to household incomes, affordability looks increasingly stretched.

And, despite a recovering economy, higher inflation and the prospect of some increase in unemployment when the furlough scheme ends means the outlook for household income growth is clouded. But the odds of a significant downturn in house prices anytime soon looks small.”

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

UK house prices continued to climb last month, despite the gradual phasing out of the government’s stamp duty holiday, as strong demand, low supply and cheap borrowing costs continues to support the market.

The latest figures from Nationwide, just released, show that UK house prices growth climbed by 11.0% in the last 12 months, up from 10.5% in July.

UK house prices are now around 13% higher than when the pandemic began, as lockdowns have driven demand for larger homes better suited for home-working.

In August alone, prices jumped by 2.1% -- the second largest monthly gain in 15 years, defying expectations of a slowdown now that the tax break on house purchases is being phased out.

It lifts the average house price to £248,857.

At the start of July, the stamp duty holiday on purchases in England and Northern Ireland halved to only cover the first £250,000, before winding up at the end of September. It has already ended in Wales and Scotland.

Robert Gardner, Nationwide’s Chief Economist, said August’s price rise is a surprise -- and may be due to homeowners trying to take advantage of the smaller tax saving still on offer. A lack of supply is another factor.

“The bounce back in August is surprising because it seemed more likely that the tapering of stamp duty relief in England at the end of June would take some of the heat out of the market. Moreover, the monthly price increase was substantial – at 2.1%, it was the second largest monthly gain in 15 years (after the 2.3% monthly rise recorded in April this year).

The strength may reflect strong demand from those buying a property priced between £125,000 and £250,000 who are looking to take advantage of the stamp duty relief in place until the end of September, though the maximum savings are substantially lower (£2,500 compared to a maximum saving of £15,000 on a property valued at £500,000 before the stamp duty relief in England tapered).

Lack of supply is also likely to be a key factor behind August’s price increase, with estate agents reporting low numbers of properties on their books.

Also coming up today

UK shop prices rose last month, according to the latest data from the British Retail Consortium, in a sign that driver shortages and the costs of Brexit-induced red tape are beginning to hit household budgets.

The latest figures from the BRC and research group NielsenIQ reveal a 0.4% month-on-month rise in August. This was driven by a 0.6% rise in non-food prices, including a sharp increase in the cost of electrical goods caused by shortages of micro-chips and shipping problems.

While British shop prices remain below those in 2020, down 0.8% in August compared with the same month a year earlier, that marked a slowdown in deflation from the 1.2% year-on-year fall recorded in July.

Helen Dickinson, the chief executive of the BRC, which represents hundreds of retail businesses, warned:

“There are some modest indications that rising costs are starting to filter through into product prices.”

The OPEC group, and allies including Russia, are meeting virtually today to discuss their oil output plans. They’re expected to ratify their plan to pump an extra 400,000 barrels of crude a day in October, in the face of pressures from the White House to boost production.

Shell has announced its aim to install 50,000 on-street electric vehicle (EV) charging points in the UK over the next four years, in an attempt to provide a third of the network needed to hit national climate change targets.

The latest PMI manufacturing reports will show how factories in the UK, eurozone and the US fared last month. Data released already today shows that Asia’s factory activity lost momentum in August as a resurgence in coronavirus cases disrupted supply chains across the region.

European stock markets are on track to open a little higher on the first day of September, having posted their seventh straight month of gains in August.

And the latest reshuffle of the UK’s stock market indices will be announced after the market close. Takeover targets Morrisons and Meggitt are likely to be promoted to the FTSE 100, following the surge in their share prices, while Just Eat Takeaway.com is being ejected after FTSE Russell ruled that the food-on-wheels firm is Dutch, not British.

The agenda

• 9am BST: Eurozone manufacturing PMI for August
• 9.30am BST: UK manufacturing PMI for August
• 10am BST: Eurozone unemployment report for July
• 1pm BST: Brazil’s Q2 GDP report
• 1.15pm BST: ADP report on US private sector payrolls
• 3pm BST: US manufacturing PMI for August