That’s all for today. Here’s a reminder of the key points.

Britain’s private sector is slowing, as Covid-19 worries and restrictions hurting the service sector. The latest survey of purchasing managers showed that growth is weakening, after a very strong August.

Economists warned that the latest curbs mean the economy is likely to flatline over the next few months, while a full national lockdown could put Britain back into recession.

With the economy slowing, and millions of jobs at risk, UK chancellor Rishi Sunak will announce new measures to help the country through a tough winter tomorrow.

America’s economy is also slowing slightly, suggesting that it may have peaked ahead of the November presidential election battle.

The eurozone has already suffered a sharper slowdown, with growth all but wiped out this month. Markit, which carried out the survey, fears the eurozone could drop back into recession soon.

European markets rallied, though, on predictions that the slowdown could also spur new stimulus measures.

The Bank of England has agreed it could have spotted the misuse of its press conference audio feed sooner.

Staff at HSBC and Goldman Sachs have been told to keep working from home where possible.

The boss of Tesco has urged UK shoppers to resist panic buying, amid a jump in demand for essentials.

Good night!

Our economics editor, Larry Elliott, has the latest on tomorrow’s shock mini-budget:

Rishi Sunak has scrapped this autumn’s budget before the announcement on Thursday of a revamped support package to protect jobs and the economy through a looming winter Covid-19 crisis.

Faced with the new threat to the economy caused by the tightening up of coronavirus restrictions this week the chancellor believes the priority is to see the UK through the coming months rather than make long-term tax and spend decisions.

A Treasury source said: “No-one wanted to be in this situation but we need to respond to it. The Chancellor has shown he has been creative in the past and we hope that people will trust us to continue in that vein. Giving people reassurance and businesses the help they need to get through this is uppermost in his mind.”

Sources said the chancellor had been working on contingency plans over the summer in case the pandemic required it, with that work going on in parallel with preparations for the Budget.

The European stock market rally faded slightly in late trading, as investors noted that stocks have dipped on Wall Street.

But London still ended the day higher, recovering some of the chunky losses on Monday. The FTSE 100 has closed 69 points higher at 5,899, a gain of 1.2%.

Top risers included gambling groups GCV Holdings (+4%) and Flutter (+3.5%), amid reports that English professional football could get a bailout following the u-turn on allowing fans into stadiums.

Retail groups JP Sports (+3.8%) and B&M (+3%) also rallied, on hopes that Rishi Sunak will unveil new measures to protect jobs tomorrow (in what looks strongly like an unscheduled mini-budget).

The Europe-wide Stoxx 600 index ended 0.6% higher, with gains in Germany (+0.5%) and France (+0.8%) but losses in Spain (-0.3%).

Breaking! Chancellor Rishi Sunak has just announced that it will give new details of his his plan to protect UK jobs over the winter tomorrow.

In a typically eye-catching tweet, Sunak says he will update MPs on the “Winter Economy Plan” tomorrow.

So we may soon know if he’s decided to roll out a German-style wage subsidy scheme to replace the current job retention scheme which ends in October, or some other measures.

With nearly a million hospitality workers on furlough, and pubs and restaurant chains fearing heavy losses from the 10pm curfew, Sunak is under a lot of pressure to get this decision right.

Chad Moutray, chief economist at the National Association of Manufacturers, is cheered by the jump in America’s factory growth this month.

He says the sector has recovered from its worst slump since the financial crisis, after being forced to close during the pandemic.

Just in: Growth across America’s private sector slowed slightly this month, but is still running at a steady rate.

That’s according to data firm IHS Markit’s latest survey of purchasing managers.

This flash composite PMI has come in at 54.4, down slightly on August’s 54.6. That’s comfortably over the 50-point mark separating growth from contraction

Although service sector grow slowed slightly in September, this was largely balanced by a pick-up in manufacturing to a 20-month high.

Factories and service providers both reported a strong expansion in output, with goods producers registering a faster rise in production. With demand strong, output and employment both rose.

This is not as pacy as the UK’s reading of 55.7, but safely ahead of the eurozone’s slump to just 50.1.

However, the monthly dip may suggest that growth peaked in August, with election uncertainty and pandemic fears both weighing on the economy.

Here’s the details:

Markit’s Chris Williamson says the report shows the US economy had enjoyed a strong third-quarter, adding:

“The question now turns to whether the economy’s strong performance can be sustained into the fourth quarter.

Covid-19 infection rates remain a major concern and social distancing measures continue to act as a dampener on the overall pace of expansion, notably in consumer-facing services. Uncertainty regarding the presidential election has also intensified, cooling business optimism about the year ahead.

Risks therefore seem tilted to the downside for the coming months, as businesses await clarity with respect to both the path of the pandemic and the election.”

The New York stock exchange has opened cautiously higher, as investors brace to see how American companies are faring this month (the US flash PMI is imminent).

The Dow Jones industrial average has jumped by 169 points, or 0.6%, to 27,457. Nike has surged by 10% after posting stronger-than-expected results last night. Boeing, Johnson & Johnson and Caterpillar are also among the risers.

The broader S&P 500 index has inched up by 5.8 points, or 0.2%, to 3,321.

The Nasdaq has dipped by 0.2%, though, with Tesla down 5% on disappointment that the initiatives outlined at its Battery Day could be three years away.

European stock markets are still holding their earlier gains, despite signs that the eurozone and UK economies are fading.

In London, the FTSE 100 is still 2% higher, up 120 points at 5950. Top risers include retailers such as JD Sports (+5%), jet engine maker Rolls-Royce (+4.6%), banks Barclays (+4%) and Natwest (+3.9%), and hotel operator Whitbread (+3.5%).

Charles Hepworth, investment director at GAM Investments, says the threat of the eurozone falling into recession is likely to spur more stimulus packages.

It should be of little surprise though despite analysts’ more upbeat expectations as Eurozone nations struggle to halt the resurgence of coronavirus cases and it is leading to a more circumspect consumer.

It seems a W shaped economic projection might be developing following the brief bounce in PMI numbers over the summer. What this means is that continued stimulus across the Eurozone will be hopefully forthcoming – or at least that’s what markets are placing their bets on.

Hepworth also suspects that the UK’s PMI readings will deteriorate in the coming months, having shown growth in July after the strongest reading in six months in August.

Further restrictions imposed by Prime Minister Boris Johnson yesterday will likely see a similar trajectory as the Eurozone going forward as we expect to peak temporarily in the PMI numbers in the UK.

Just in: A review into a security breach at the Bank of England has concluded that the bank could have spotted the problem sooner.

Nine months ago, it emerged that some traders had enjoyed access to an audio feed of Mark Carney’s press conferences, potentially allowing them to profit from market-moving comments.

That audio-only stream was faster than the external TV broadcast, or the live-stream on YouTube. As today’s review puts it:

There is a non-negligible delay in any of the video broadcasts reaching screens and any audio-only stream – especially a low latency feed - would tend to be faster.

That is why the presence of an audio stream from the Bank’s Press Conferences, that was not provided by, or known to, the Bank, was a matter of such concern.

This audio feed was provided to subscribers of Statisma News, an affiliate of the tech company company - Encoded Media - which the Bank employed to video stream its press conferences to YouTube.

Statisma News advertised itself as a source of superfast audio streams of central bank statements.

Today’s review, by the Bank’s Internal Auditor and Independent Evaluation Office, suggests that the BoE could have investigated the situation sooner.

Our Review has indicated that there were occasions where, with the benefit of hindsight, this misuse by a third party supplier of the Bank’s audio feed could have been identified sooner by the Bank.

In late 2018, an external party made a specific allegation to the Bank with regards to Encoded Media’s use of its feed. This was not fully investigated because it was not considered possible in the Bank’s Press Conference environment. This was based on the Bank’s understanding of the facts, but it was incorrect.

In addition, the European Central Bank announced in September 2019 that they were introducing their own low latency feed of their key Press Conferences, a move which was reported as having been triggered by concerns about fast access by some companies. And some companies advertised on social media the availability of ‘fast access’ to Bank of England Press Conferences.

Up to now, the Bank has not routinely monitored social media or the broader web for evidence of companies that advertise inappropriate access to the Bank’s publications and Press Conferences.

The Bank says it accepts the review’s conclusions and recommendations, which include reviewing how technology is used to support press conferences and media interactions.

The boss of supermarket chain Tesco has urged customers to resist panic buying, following the move towards tougher Covid-19 restrictions.

CEO Dave Lewis told Sky News this morning that there’s no need to buy abnormal amounts of food, but he did anticipate some ‘stockbuilding’ by households.

“The message would be one of reassurance. I think the UK saw how well the food industry managed last time, so there’s very good supplies of food.

“We just don’t want to see a return to unnecessary panic buying because that creates a tension in the supply chain that’s not necessary. And therefore we would just encourage customers to continue to buy as normal.”

There are signs that UK consumers have been stocking up on essentials, with toilet roll sales up 23% in the last week.

WEPA Group, which produces toilet paper and kitchen towels in Bridgend, south Wales, expects sales to remain high, but insisted yesterday that supplies would not run out.

Thomas Pugh of Capital Economics says the UK recovery has started to flatten - and there could be worse ahead.

The drop in the composite IHS Markit/CIPS Flash PMI from 59.1 in August to 55.7 in September (consensus 56.3) suggests that the recovery has already started to flatten out. And reinstating restrictions on business opening hours and encouraging people to work from home again could cause the recovery to stall completely in Q4.

Pugh predicts that the restrictions announced yesterday by Boris Johnson will set back the economic recovery and cause the economy to stagnate, adding:

But the big risk is that the government has to go further. For example, a two-week national lockdown could reduce the level of GDP by 5% and set back the economic recovery by a year.

Rhys Herbert, senior economist at Lloyds Bank, also fears growth could slow:

While these latest figures paint a generally positive picture, the imposition of further restrictions this week and the significant probability that more will be added in the coming weeks, raises the odds that the rebound in growth will now slow. Even if tighter restrictions don’t have as big an impact on the economy as we saw in the spring, they may still have a negative effect on demand dynamics.

“The end of the furlough scheme is another big, imminent hurdle for the UK. A rise in unemployment could be a drag on economic growth. Add the effect of Brexit uncertainty into the mix, and the next few months may be very challenging.”

Economist are also concerned by the sharper slowdown in the eurozone this month.

Simon French of Panmure Gordon says it confirms the eurozone recovery has lost momentum:

Here’s Pantheon Macroeconomics’ take:

Newsflash: The UK’s economic recovery lost some momentum this month, even before the latest Covid-19 restrictions were announced.

That’s according to IHS Markit’s flash composite UK PMI, which tracks activity in the economy.

It has fallen to a three-month low of 55.7 this month, from a six-year high of 59.1 in August, with service sector growth slowing after a strong summer.

That still shows pretty solid growth (anything over 50 points is an expansion), and is certainly faster than the slowdown in the eurozone (where Covid-19 cases started rising earlier this summer).

However, UK services companies and manufacturers both reported weaker growth in production and activity. With new orders slowing, confidence about the future also dropped, and companies continued to cut their headcount.

Markit says:

New business volumes across the private sector economy also increased at the weakest pace for three months in September.

Reports from survey respondents highlighted concerns that the speed of recovery in customer demand had already peaked, with subdued economic conditions at home and abroad acting as a brake on new project starts...

Worries related to the COVID-19 pandemic were commonly cited in September, alongside Brexit-related concerns and subdued forecasts for the global economy.

Here’s the details:

• Flash UK Composite Output Index Sep: 55.7, 3-month low (Aug final: 59.1)
• Flash UK Services Business Activity Index Sep: 55.1, 3-month low (Aug final: 58.8)
• Flash UK Manufacturing Output Index Sep: 59.3, 2-month low (Aug final: 61.0)
• Flash UK Manufacturing PMI Sep: 54.3, 2-month low (Aug final: 55.2)

More to follow....

Chris Williamson, chief business economist at IHS Markit, fears the eurozone could fall back into recession in the next three months.

The sharp slowdown in service sector activity this month is a worrying sign that Covid-19 is damaging growth again, he warns.

Here’s his take on the drop in the eurozone PMI to just 50.1 this month, from 51.9:

“The eurozone’s economic recovery stalled in September, as rising COVID-19 infections led to a renewed downturn of service sector activity across the region.

A two-speed economy is evident, with factories reporting that production growth was buoyed by rising demand, notably from export markets and the reopening of retail in many countries, but the larger service sector has sunk back into decline as face-to-face consumer businesses in particular have been hit by intensifying virus concerns.

Job losses also picked up in the service sector as more companies became worried about costs and overheads. Fortunately, factories saw slower staff shedding as pressure on capacity begins to emerge, suggesting the overall rate of job cutting has peaked.

Encouragement comes from a further improvement in companies’ expectations for the year ahead, but this optimism often rests on infection rates falling, which remains far from guaranteed for the coming months. The main concern at present is therefore whether the weakness of the September data will intensify into the fourth quarter, and result in a slide back into recession after a frustratingly brief rebound in the third quarter.

Newsflash: the eurozone’s service sector has slumped into reverse this month, as rising Covid-19 cases undermine its recovery.

Data firm Markit’s latest survey of purchasing managers, just released, shows that business growth across the euro area is grinding to a halt.

This is due to “a renewed downturn in the service sector”, which many companies blamed on rising coronavirus cases. With demand weakening, many continued to cut jobs.

This pulled Markit’s flash Eurozone Composite PMI down to to just 50.1, barely above stagnation, from 51.9 in August. That suggests the summer recovery is petering out.

Markit says:

Having rebounded sharply in July and, to a lesser extent, August from COVID-19 lockdowns during the second quarter, the PMI has since indicated a near stalling of the economy at the end of the third quarter as rising infection rates and ongoing social distancing measures curbed demand, notably for consumer-facing services.

Although manufacturing output growth accelerated in September to the fastest since February 2018, this was more than cancelled out by a slump in services.

The service sector flash PMU down sharply, to just 47.6 this month from 50.5 in August. That shows a sharp fall in activity this month -- notably in France, as we covered earlier.

Reaction to follow!

Fears about the economic recovery haven’t prevented stocks rallying in London.

The FTSE 100 has jumped by 89 points, or 1.5%, in early trading, to 5921 - away from the two-week low seen on Monday.

Exporters are benefitting from the pounds weakness against the dollar with fashion chain Burberry up 4%.

Some of the worst hit stocks are rising too, with airline group IAG up 5% and jet engine maker Rolls-Royce gaining 3.7%.

Richard Hunter, head of markets at interactive investor, warns:

Markets have generally stemmed the declines of recent trading sessions, although any relief could be short-lived given overarching concerns which have not gone away.

The potential for Covid-19 to wreak further economic damage was brought into sharp focus as the UK announced further restrictive measures. In the US, deteriorating relations with China and political distractions add to an economy which is still being hampered by the effects of the virus.

In the UK, attempts to foil a second wave of the pandemic piles additional pressure on several already beleaguered sectors which had shown some signs of a tentative recovery. Hospitality, leisure, tourism and the banks will all come under the spotlight once more as the moves by the UK government threaten to choke recovery prospects.

The additional concerns of a spike in unemployment after the end of the furlough scheme, as well as increasingly fraught discussions between the UK and the EU beg the question of whether more stimulus is required, or even possible.

Other European markets are shrugging off this morning’s weak data, with the French CAC and German DAX both 1.3% higher.

The first European PMI survey for September is in...and it’s not good.

French business activity has hit a four-month low this month, as renewed disruption related to the coronavirus disease 2019 (COVID-19) pandemic hit its economy.

Purchasing managers at service sector companies reported a notable slowdown in activity, following a jump in Covid-19 cases in France in recent weeks.

This dragged Markit’s preliminary French PMI down to 48.5 for September, from 51.6 in August, which shows that activity is falling [anything below 50 shows a contraction]. This is the first drop in four months.

The survey found that new work declined, while unemployment continued to rise.

Eliot Kerr, Economist at IHS Markit, explains:

“The sharp rise in COVID-19 cases recorded across France during September helped to explain the first fall in business activity since May. August data had already pointed to a slowdown in the recovery but now the path towards pre-coronavirus levels of activity has gone into reverse.

The rise in case numbers has been accompanied by fresh restrictions, but has also caused hesitancy among businesses due to fears of a second round of temporary business closures. “For now, at least, firms remain optimistic towards the year ahead outlook, but should the current trajectory of infection rates persist, that confidence is likely be tested in the coming months.”

The services sector PMI dived to 47.5 from 51.5 in August.

However, manufacturing has returned to growth - with the French factory PMI rising to to 50.9 from 49.8.

German consumer confidence remains weak, according to the latest data from the GfK institute.

GfK’s forward-looking gauge of consumer morale, released this morning, hit -1.6 points for October, barely an improvement on the slump to -1.7 seen in September.

That’s rather weaker than hoped (economists had forecast a rise to -0.6)

GfK reports that the Gernan consumers are more optimistic about economic and income prospects, but less likely to spend.

Rolf Bürkl, GfK consumer expert, says Berlin’s stimulus package is helping.

“Despite rising infection figures and the increasing fear of tighter restrictions caused by the pandemic, the consumer climate has stabilized. The extensive support packages for business and consumers are clearly suitable measures to help Germany emerge from the worst recession since the war,”

The further course of the infection rate in Germany and the situation in the labor market will decide whether the previous month’s downturn remains a flash in the pan and whether consumer mood is able to recover in the coming months.”

Carsten Brzeski of ING says that “German consumer confidence is stagnating”, and fears that economic demand could be weaker than hoped:

Up to now, retail sales and private consumption have experienced a strong rebound. The lifting of the lockdown measures and fiscal measures to sustain purchasing power are an important driver of the return of private consumption. Looking ahead, only a swift return of the labour market to pre-crisis levels would unleash potential pent-up demand.

However, given latest announcements of job shedding in the sectors hit most by the economic impact from lockdowns and social distancing and in sectors, in which Covid-19 is accelerating structural transitions, such a swift return looks increasingly unlikely.

Katharina Utermöhl of Allianz is similarly cautious:

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

Hopes of a swift rebound from the Covid-19 pandemic have taken a knock this week, as cases continue to rise and the UK imposes new restrictions to fight the virus.

This has driven the US dollar to its highest level in two months today, as fears over the economic outlook push investors towards safer assets. That’s knocked sterling below $1.27 for the first time since late July.

After stock markets suffered their worst plunge since June on Monday, there’s an autumnal chill in the markets (and outside too).

Economists fear that Britain’s recovery will falter in the coming months, as pubs are forced to close early and millions of office workers continue to work from home.

Bank of America’s chief economist, Robert Wood, predicts growth will stall in the final quarter of 2020:

“We struggle to see how the economy can grow in the fourth quarter with escalating lockdown measures, fading stimulus and Brexit risks.”

Globally, Covid-19 cases are rising faster than ever before. Overnight, the World Health Organisation reported that the weekly number of new recorded infections worldwide hit its highest ever level last week, at nearly two million.

Kyle Rodda of IG says the US dollar’s rally this week shows the market appears to harbour greater doubt about the global economy’s recovery.

It seems to be a matter of degree rather than kind, but a couple of crucial variables are changing the prevailing narrative. One: fresh US fiscal support may not arrive before the US Presidential election. Two: Europe’s economic recovery is at risk from the latest wave of COVID-19 infections and lockdowns

The notion of a broad-based lift in global economic activity, that would crucially narrow the performance gap between the US economy versus that of the rest of the world, has been called into question. Not that such a thing can’t or won’t occur, but that instead, perhaps its timeline has been slightly pushed back.

This morning we discover how factories and service sector companies in the eurozone, and across the UK, are faring this month. The latest PMI surveys are expected to show that UK private sector growth is slowing, as the burst of activity over the summer fades.

America’s top central banker struck a cautious note when he began this week’s testimony to Congress. Fed chair Jerome Powell warned that the outlook for the US economy remains “highly uncertain”, despite recent improvements.

A full recovery is likely to come only when people are confident it is safe to re-engage in a broad range of activities

The agenda

• 9am BST: Eurozone flash composite PMI: expected to drop to 51.7 from 51.9
  
• 9.30am BST: UK flash composite PMI: expected to drop to 56.3 from 59.1
• 2pm BST: US house price index for July
• 2.45pm BST: US flash composite PMI: expected to be unchanged at 53.1
• 3pm BST: Fed chair Jerome Powell testifies to Congress
• 3.30pm BST: US weekly oil inventory figures