Eurozone Business Activity Hits Near 3.5-Year High Amid Inflation Fears

The eurozone's business activity reached its highest level in nearly three and a half years in September, driven by growth in both services and manufacturing industries. The eurozone purchasing managers' index (PMI) rose to 53.1 after hitting 52 in August, according to S&P Global.

This increase above 50 indicates expansion, while a figure below 50 signals contraction. Chris Williamson, chief business economist at S&P Global, noted that it's no surprise to see inflationary pressures rising again due to increased energy prices stemming from the ongoing conflict in the Middle East.

The European Central Bank (ECB) recently raised interest rates for the second time this year in response to these concerns. Economists expect further rate hikes, with Williamson stating that 'the resilience of economic growth amid headwinds of geopolitical issues and rising prices will likely embolden the ECB to hike interest rates again before the end of the year.'

This suggests a possible October rate increase is on the table.