Eurozone private sector growth hits 41-month high in September

The Eurozone's private sector activity surged in September, reaching its highest growth rate in 41 months. The composite Purchasing Managers’ Index (PMI) rose to 53.1, up from 52.0 in August, according to S&P Global. The services business activity index also climbed to a 10-month high of 53.0, while readings above 50 indicate expansion.

All five countries covered by the survey recorded growth for the first time since November, with Spain leading the expansion, followed by Ireland. Germany’s growth accelerated, while Italy and France saw more modest increases. New orders rose at their fastest pace in 41 months, supported by the strongest rise in foreign orders in over 4.5 years.

Employment growth remained marginal, but companies hired additional staff due to increased outstanding work since June 2022. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the PMI surveys signal a GDP growth rate of 0.4% quarterly, with momentum accelerating into the fourth quarter. He highlighted strong growth in IT-related services, driven by 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 suggested that the renewed upturn in price pressures hints at Eurozone inflation running closer to 4% than the European Central Bank’s 2% target. Combined with accelerating growth, these figures could fuel speculation about more aggressive monetary policy tightening.