Euro Zone Factory Growth Hits Four-Year High Amid Rising Inflation Concerns

Factory growth in the euro zone accelerated for the third consecutive month in September, reaching its fastest rate in more than four years. The S&P Global Eurozone Manufacturing Purchasing Managers' Index (PMI) rose to 52.9 from 52.7 in August, its highest level since May 2022.

The growth is driven by rising demand for investment goods such as machinery and equipment, with output of these capital goods growing at a rate not seen since the post-COVID rebound five years ago, according to Chris Williamson, chief business economist at S&P Global Market Intelligence.

Broad-based growth across the bloc was led by the Netherlands, while Germany recorded solid growth. France, Italy, and Spain saw modest expansion in output. New orders expanded at their fastest rate since early 2022, helped by export growth that hit a more than four-and-a-half-year high.

However, rising prices could threaten the recovery, with both input and output inflation accelerating last month. Official data due on Friday is expected to show inflation rose to 3.6% in September from 3.2% in August, the highest since September 2023.