Eurozone Private Sector Growth Hits 41-Month High in September

The Eurozone's private sector experienced its strongest growth in nearly three-and-a-half years in September, according to S&P Global. The composite Purchasing Managers’ Index (PMI) reached a 41-month high of 53.1, up from 52.0 in August. The services business activity index also climbed to a 10-month high of 53.0, while the output growth accelerated in both manufacturing and services sectors.

All five countries surveyed, 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 surged at their fastest pace in 41 months, driven by the strongest rise in foreign client orders in over four and a half years.

Employment growth remained marginal but increased as outstanding work rose for the first time since June 2022. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the data suggests the Eurozone’s GDP is growing at a 0.4% quarterly rate, with momentum building into the fourth quarter. He highlighted strong growth in IT-related services, particularly due to artificial intelligence investments, and resilient consumer-oriented services despite higher energy prices.

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. Williamson warned that these renewed price pressures hint at Eurozone inflation running closer to 4% than the European Central Bank’s 2% target, potentially fueling speculation about more aggressive monetary policy tightening.