Eurozone PMI Surges
Eurozone Private-Sector Activity Hits Three-Year High Amid Rising Input Costs
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Key Points
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The composite PMI reached its highest level since April 2023, while the services PMI rose to its strongest reading in nearly a year and manufacturing output edged up to 53.4 from 53.3.
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The improvement in demand was supported by another increase in exports, including trade within the eurozone itself, with overall new orders recording their fastest growth in more than four years.
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France’s return to expansion was accompanied by weaker labor-market and confidence indicators: employment continued to decline and business optimism deteriorated, even as new orders posted their first improvement in 10 months.
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French input and output prices accelerated sharply, with survey respondents citing higher fuel, energy, metals and component costs; firms passed some of those increases on to customers through higher charges.
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S&P Global’s Chris Williamson said the resilience of growth was particularly encouraging given renewed energy-driven inflation, while markets were pricing roughly three additional ECB rate increases by the end of June after the central bank’s second hike of the year.
Eurozone private-sector activity accelerated to its fastest pace in over three years in September, with the composite PMI climbing to 53.1 from 52.0 in August, EU Today reported. Services led the charge, rising to 53.0, while manufacturing held steady above 50. The surge defies expectations that rising energy costs would slow growth.
But faster growth came with a price. Companies reported higher fuel, energy, and metal costs, pushing inflation pressures sharply higher. EU Today noted that firms passed some increases to customers. The combination of resilient expansion and accelerating prices is reinforcing bets that the European Central Bank could raise rates again, though October's odds remain largely unchanged.
Services Surge While Manufacturing Stays Solid
Services PMI climbed to 53.0, its strongest reading in nearly a year, powering the broader economy forward. Manufacturing output edged up to 53.4 from 53.3, keeping the sector in expansion. Both readings point to broad-based growth across the private sector, not just a one-industry story.
New orders accelerated even faster, hitting their quickest growth pace in over four years. EU Today reported that exports picked up strength, including trade within the eurozone itself. This demand surge prompted companies to hire more workers in response.
France Returns to Growth Despite Labor Weakness
France's business activity bounced back into expansion territory after struggling in prior months. Services activity improved and demand strengthened, pushing the country to outperform expectations. New orders posted their first improvement in 10 months, signaling a real shift in momentum.
But not all signals were positive. EU Today noted that French employment continued to decline and business confidence deteriorated. Input and output prices accelerated sharply as firms grappled with higher fuel, energy, metals and component costs.
Germany Bounces Back to Near-Year High
Germany's composite PMI rose to 53.8 from 51.8, hitting a near one-year high, Briefs reported. The rebound in private-sector activity beat economist expectations. Germany, Europe's largest economy, had lagged through much of the year before September's surge.
The improvement reflects a broader European momentum shift. Stronger demand from both domestic and export markets is pulling manufacturing and services upward. Briefs cited the services rebound as a key driver of Germany's recovery.
Inflation Pressures Mount Despite Growth Optimism
Rising input costs are creating a dilemma for the European Central Bank. Companies face higher energy and fuel bills, pushing them to raise prices for customers. S&P Global's Chris Williamson said the resilience of growth was encouraging given the renewed energy-driven inflation challenge.
Markets are already pricing in roughly three additional ECB rate increases by the end of June after the central bank's second hike of the year. The strong September PMI data suggests the ECB has ammunition for further tightening, even as growth stays resilient.
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