Eurozone Business Activity Hits 53.1, a Three-Year High
S&P Global data shows September output expansion outpaced forecasts and energy cost pressures.
Key points
- The S&P Global Flash Euro Zone Composite PMI output index rose to 53.1 in September.
- New orders in the eurozone grew at the fastest pace in more than four years.
- ING analyst Carsten Brzeski stated the strong PMI figures were almost too good to be true.
The S&P Global Flash Euro Zone Composite PMI output index rose to 53.1 in September. This marks the fastest pace of business activity expansion in over three years. The figure exceeded the 51.7 point average forecast from economists surveyed by Reuters.
This acceleration occurred despite rising energy costs for companies and households. The increase follows the previous month's reading of 52.0 points. UA.NEWS reports that this resilience came amid ongoing conflicts in Ukraine and the Middle East.
Regional performance drives overall expansion
S&P Global recorded increased output in all regions covered by its statistics. Germany saw strong growth in business activity despite intensifying inflationary pressure. France recorded its highest growth pace in slightly more than two years.
New orders in the eurozone grew at the fastest pace in over four years. This was supported by a further increase in exports. Trade within the currency bloc contributed significantly to this upward trend.
Cost pressures and hiring trends
The services sector index reached its highest level in almost a year. The manufacturing index remained stable during the reporting period. Companies hired more workers to meet the growing demand for goods and services.
Businesses faced a jump in input costs due to high energy prices. Firms passed some of these increased costs directly on to consumers. This dynamic contributed to the broader inflationary environment in the region.
Analysts question data reliability and outlook
ING analyst Carsten Brzeski called the PMI figures almost too good to be true. He noted that the economy's resilience to the energy shock was a pleasant surprise. However, he expressed hope that the data would not prove misleading in the long run.
Capital Economics economist Jack Allen-Reynolds believes the improvement supports third-quarter GDP growth expectations. This holds despite weak official data recorded for July. The European Central Bank recently raised interest rates to curb inflation caused by rising energy prices.
