Eurozone business activity expanded at its fastest rate in more than three years in September, while the latest survey also showed an acceleration in input costs and selling prices.
The S&P Global Eurozone Composite PMI rose to 53.1 in September from 52.0 in August, reaching its highest level in 41 months. A reading above 50 indicates an expansion in activity.
Input costs and selling prices increased at their fastest rates since May, although both remained below their recent peaks. Price increases were more pronounced in manufacturing than in services.
S&P Global Chief Business Economist Chris Williamson said the survey data were consistent with inflation running closer to 4% than the European Central Bank’s 2% target and indicated that the combination of higher price pressures and stronger economic activity could increase expectations for tighter monetary policy.
Williamson said the PMI figures were consistent with eurozone GDP expanding at an annual quarterly rate of approximately 0.4%, with growth gaining momentum heading into the fourth quarter.
Services PMI Rises to 10-Month High
The Eurozone Services PMI increased to 53.0 from 51.6 in August, reaching its highest level in 10 months. Services activity expanded for a third consecutive month, while manufacturing output also increased at a faster rate.
Services companies raised their prices at the fastest rate since February 2024, while their input costs recorded the largest increase in four months.
IT-related services were among the sectors recording higher activity, supported by spending associated with artificial intelligence and growth in professional and business services. Consumer-facing services also continued to expand despite higher energy prices, particularly in Spain.
All five eurozone economies covered by the survey recorded growth for the first time since November.
Spain reported the fastest expansion, followed by Ireland. Growth in Germany accelerated to one of its highest rates since early 2022, while Italy and France recorded more moderate increases.
Services activity returned to growth in Germany and France, while Italy recorded a fourth consecutive month of expansion.
New Orders Increase at Fastest Rate in 41 Months
Demand for goods and services increased for a third consecutive month and at the fastest rate in 41 months.
New orders from overseas customers recorded their strongest increase in more than four-and-a-half years. New business in the services sector also increased for a third month, primarily reflecting domestic demand, while export orders were broadly unchanged.
Backlogs of work across the eurozone increased for the first time since June 2022. Employment rose slightly for a second consecutive month, although the rate of hiring in services slowed.
Businesses remained positive about activity over the coming 12 months, although confidence remained below historical norms. Manufacturing expectations improved to a seven-month high, while confidence among services companies declined.
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