Eurozone Business Activity Sees Fastest Growth in Over Three Years

The Eurozone's business activity has seen its fastest growth in over three years, according to the S&P Global Flash Euro Zone Composite PMI Output Index. The index climbed to 53.1 in September from 52.0 in August, surpassing the Reuters poll projection of a decline to 51.7. A figure above 50 denotes an expansion in activity.

The services sector has contributed significantly to this growth, with its PMI advancing to 53.0 from 51.6, its highest in nearly a year and well above the poll estimate for a drop to 51.5. The manufacturing index remained unchanged at August's 52.7.

Chris Williamson, chief business economist at S&P Global, said that renewed inflationary pressures in September were unsurprising given higher energy prices tied to the ongoing Middle East conflict. He called the reported resilience of economic growth all the more encouraging, and noted that it would likely embolden the European Central Bank to hike interest rates again before the end of the year.

The firms in the Eurozone have managed to pass on some of the increased input costs to customers, but they have also seen a surge in operating expenses due to elevated energy prices. The European Central Bank raised interest rates for the second time this year earlier this month to quell an energy-driven inflation rise and cautioned that price pressures could prove lasting.