Euro Zone Business Activity Hits 41-Month High on Strong Growth

The euro zone's business activity reached its highest level in 41 months in September, according to the latest S&P Global Eurozone Composite PMI data. The index climbed to 53.1 from 52 in August, indicating robust growth as readings above 50 signal expansion. The survey highlighted that companies faced rising input costs and selling prices, which hit their fastest pace since May, though still below recent peaks. Price pressures were more pronounced in manufacturing than in services.

S&P Global’s chief business economist Chris Williamson noted that the data suggests inflation is running closer to 4% rather than the European Central Bank’s 2% target. The stronger growth could reinforce expectations for tighter monetary policy. The PMI data also points to an annualized GDP growth rate of about 0.4%, with momentum building into the fourth quarter.

The euro zone services PMI rose to 53 from 51.6, marking its highest level in 10 months. Services activity expanded for a third straight month, while manufacturing output also accelerated. Service providers raised prices at the fastest pace since February 2024, and their costs increased at the quickest rate in four months. IT-related services, particularly those linked to artificial intelligence, were among the strongest performers, along with consumer-focused services in Spain.

All five euro zone economies covered by the survey recorded growth for the first time since November, with Spain leading the expansion. Germany’s recovery gained traction, reaching one of its strongest levels since early 2022, while Italy and France saw more modest growth. Demand for goods and services strengthened, marking the fastest increase in 41 months. New orders from overseas customers rose at the fastest pace in over four-and-a-half years, although export orders remained broadly unchanged.