Eurozone Business Activity Hits 41-Month High in September

The eurozone's private-sector business activity surged in September, reaching its highest level in 41 months. S&P Global's final composite Purchasing Managers' Index (PMI) climbed to 53.1 points, up from 52.0 in August. A PMI above 50 indicates expansion, while below 50 signals contraction. The services sector saw its business activity index rise from 51.6 to 53.0, the highest in a decade.

All five countries surveyed, Spain, Ireland, Germany, Italy, and France, recorded growth for the first time since November. Spain led the pace, followed by Ireland, while Germany saw accelerated recovery. Growth in manufacturing and services sectors also picked up, with new orders increasing at the fastest rate since May. Foreign orders rose at the sharpest pace in over four and a half years, prompting companies to hire more staff, though employment growth remained minimal.

Despite the positive outlook, inflationary pressures intensified. Input costs and output prices rose at the fastest pace since May, with services companies raising their charges at the quickest rate since February. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the data suggests eurozone GDP growth of 0.4% this quarter, with momentum strengthening ahead of the fourth quarter. He highlighted strong growth in IT-related services due to AI investments and resilient consumer services despite higher energy prices.

Williamson also warned that the survey results may indicate eurozone inflation closer to 4% than the European Central Bank’s 2% target, suggesting ongoing economic challenges.