Eurozone business activity grows at fastest pace in 41 months in September

Eurozone private sector activity expanded at its fastest pace in nearly three-and-a-half years in September, with the composite Purchasing Managers’ Index (PMI) rising to a 41-month high, S&P Global said on Monday.

The final composite PMI output index climbed to 53.1 from 52.0 in August, while the services business activity index increased to a 10-month high of 53.0 from 51.6.

Readings above 50 indicate expansion, while those below that threshold signal contraction.

Output growth accelerated across both manufacturing and services, rounding off a robust third quarter as demand improved and employment increased.

All five countries covered by the composite survey recorded growth for the first time since November. Spain led the expansion, followed by Ireland, while Germany’s upturn accelerated. Italy and France registered more modest growth.

New orders increased at their fastest pace in 41 months, supported by the strongest rise in orders from foreign clients in more than 4 1/2 years.

Outstanding work increased for the first time since June 2022, prompting companies to hire additional staff, although employment growth remained marginal.

“The collective signal from the PMI surveys is one of GDP growing at a 0.4% quarterly rate, with momentum accelerating as we head into the fourth quarter,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

He said IT-related services showed particularly strong growth, supported by artificial intelligence investments, while consumer-oriented services remained resilient despite higher energy prices.

Inflationary pressures also 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.

“A renewed upturn in price pressures signalled by the survey meanwhile hints at eurozone inflation running closer to 4% than the ECB’s (European Central Bank's) 2% target,” Williamson said.

Combined with accelerating growth, the figures would fuel speculation about more aggressive monetary policy tightening, he added.