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© Photograph: Bloomberg/Getty Images Buildings in the skyline of the city center of Leeds.

Rolling coverage of the latest economic and financial news.

Introduction: UK Q3 and September GDP reports

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

Today we discover how the UK economy performed in September, and across the third quarter of the year.

Preliminary GDP figures released at 7am UK time are expected to show a slowdown in Q3, with growth of around 1.5% in July-September, down from 5.5% in April-June.

That would confirm that the initial burst of activity in Q2 as lockdown restrictions were eased has faded, as worker shortages and the summer ‘pingdemic’ hit companies.

Related: UK firms offer up to £2,000 sign-on bonuses amid Christmas labour shortage

For September alone, economists forecast growth of around 0.4%. That would match the uptick in August when the boom in domestic holidays fuelled a rebound, led by the food, accommodation and leisure industries.

That would lift the economy closer to its pre-pandemic levels.

A weak GDP report would be a concern, at a time when inflation is heading towards 5%, supply chain problems continue to hit UK factories, and families face a cost of living squeeze.

Michael Hewson of CMC Markets explains:

It would be no surprise to anyone to find that the UK economy has slowed in Q3, after a decent upward revision to the numbers in Q2 saw a rebound of 5.5%.

These revisions came in the form of higher household spending on the likes of food services, accommodation, and hospitality, and this is expected to remain fairly resilient in Q3.

The normalisation of economic activity, as well as so called staycations appears to have been the main driver here and is likely to have continued into the first part of Q3 given that this also covers the period of the school holidays. As such this should be reflected in the index of services numbers, which should account for a good part of the economic expansion during the quarter with expectations of a rise of 1.9% over the period of July to September. Private consumption is expected to slow from 7.2% in Q2 to 3.1% in Q3.

Manufacturing, particularly new car production was, and is likely to remain a drag due to the chip shortages, along with maintenance shutdowns in the North Sea.

The better-than-expected numbers in Q2 also means that the UK economy was much stronger than we thought when heading into Q3.

It also means that the slowdown we are currently experiencing is coming from a much higher level and as such may be easier to absorb, although concerns over higher inflation could act as a brake in Q4.

The longer-term UK economic outlook is worrying, after the NIESR thinktank warned earlier this week that Britain’s economy risks a long period of stagnation that damages household incomes and undermines plans to level up the regions.

Related: UK plc risks long-term stagnation and rising destitution, warns top thinktank

Higher inflation is also a growing concern in America.

Consumer prices jumped by 6.2% year-on-year, its highest in three decades, piling more pressure on the US Federal Reserve to lift interest rates from their current record lows.

Stocks on Wall Street took a knock, with the tech-focused Nasdaq falling 1.66%, while the US dollar strengthened.

Related: Pressure on Fed to raise interest rates as US inflation surges to 30-year high

And the European Commission is due to release its latest economic forecasts this morning:

The agenda

  • 7am GMT: UK GDP report for Q3 2021, and September
  • 7am GMT: UK trade balance for September
  • 9am GMT: European Central Bank economic bulletin
  • 10am GMT: European Central Bank macroeconomic projections
  • 2pm GMT: NIESR monthly GDP tracker for October