Eurozone Accelerates Strongly, Business Activity at Its Highest in Three Years

Business activity in the eurozone rose in September at its strongest pace in over three years, with stronger demand signaling growth in activity towards the end of the year, according to a monthly survey by S&P Global released on Wednesday.

The Purchasing Managers’ Index (PMI) for the eurozone’s private sector increased by 1.1 points in September compared to the revised value from August, reaching 53.1 points, its highest value since April 2023, preliminary data from S&P Global showed. Index values above 50 indicate growth in activity. Stable growth was recorded in both the industrial and service sectors, the S&P Global report noted.

– The acceleration of economic growth means that the preliminary PMI signals an increase in GDP at a quarterly rate of 0.4 percent, and the accelerated filling of order books in the industrial and service sectors in September indicates continued growth into the fourth quarter – said S&P Global’s chief economist Chris Williamson.

Business activity in Germany rose for the third consecutive month, at the fastest pace in nearly a year, while France recorded growth for the first time in ten months.

– Production, led by Germany, is experiencing its biggest boom in over four years, driven by increased spending on AI and defense, while the growth of the service sector is also accelerating, which signals broad-based improvement – Williamson emphasized.

The total number of new orders increased for the third consecutive month, the strongest in over four years, along with further growth in exports, which includes trade between eurozone members. The engine of growth was the industry, while foreign service orders were again reduced.

In such conditions, companies continued to open jobs in September, but at the same moderate pace as in August. In the service sector, the number of employees increased, while in the industry it remained at last month’s level, the survey showed.

At the beginning of autumn, input costs for companies also rose, the strongest in four months. Some of the companies’ costs were passed on to consumers, raising prices for products and services, also the strongest in four months.

This is particularly important in the context of the new rise in energy prices and the warning from the chief economist of the European Central Bank, Philip Lane that inflation in the euro area could remain elevated longer than previously expected.

However, managers’ optimism was subdued, the survey showed, reflecting primarily cautious forecasts in France, S&P Global noted.