Euro zone business activity posts surprise upturn, PMI shows

Euro zone business activity rose in September at its quickest pace in more than three years, according to a survey, and beat expectations of a slowdown. The S&P Global flash composite output index climbed to 53.1 from 52.0 in August, its highest level since April 2023, while a Reuters poll had forecast a dip to 51.7. Readings above 50.0 point to expanding activity.

Overall orders expanded at their fastest pace in over four years, aided by a further increase in exports, with both services and factories contributing to growth. The services measure rose to 53.0 from 51.6, reaching its strongest level in almost a year, while manufacturing held steady at 52.7. Companies took on more staff to meet demand, but Middle East tensions pushed energy prices higher and lifted their input costs sharply.

S&P Global's chief business economist Chris Williamson said the resilience of growth was encouraging despite rising inflation pressures. He suggested this could prompt the European Central Bank to lift rates again, with an October increase now very much a real possibility. Business Recorder noted that the ECB had already raised rates for a second time this year, and markets are pricing three more increases by the end of June.