Eurozone business activity hits 41-month high in September

Eurozone private sector activity surged in September, reaching its highest level in 41 months. The composite Purchasing Managers’ Index (PMI) climbed to 53.1, up from 52.0 in August, indicating strong expansion. The services business activity index also hit a 10-month high of 53.0, while both manufacturing and services sectors saw accelerated output growth.

All five countries covered by the survey, Spain, Ireland, Germany, Italy, and France, recorded growth for the first time since November. Spain led the expansion, followed by Ireland and Germany, with Italy and France showing more modest gains. New orders rose at the fastest pace in 41 months, driven by a significant increase in foreign demand.

Employment growth remained marginal, but companies hired additional staff due to rising outstanding work for the first time since June 2022. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the data suggests GDP growth of 0.4% quarterly, with momentum building into the fourth quarter.

Inflationary pressures intensified, with input costs and selling prices rising at their fastest rates since May. Services firms increased their charges at the sharpest pace since February 2024, hinting at eurozone inflation running closer to 4% than the European Central Bank's 2% target. Williamson added that these figures could fuel speculation about more aggressive monetary policy tightening.