Euro zone PMI posts surprise upturn to fastest expansion in over three years

Euro zone business activity accelerated more than expected in September, posting the fastest expansion in more than three years, according to S&P Global flash PMI data reported by Reuters on 23 September.

Composite beats forecasts

The Flash Euro Zone Composite PMI Output Index rose to 53.1 from 52.0 in August. A Reuters poll had expected 51.7, with the highest forecast at 52.6. Readings above 50 signal expansion.

Broad-based growth

The upturn was broad-based. Germany remained solid, and France recorded its fastest expansion in just over two years on a services rebound. Growth in the UK, outside the EU, cooled. New orders rose at the fastest pace in more than four years, with exports also up. Services PMI hit its highest in nearly a year, while manufacturing held steady.

Hiring, costs and the ECB path

Firms hired more staff but faced a jump in input costs linked to elevated energy prices amid the US war with Iran, passing some of those costs to customers. ING’s Carsten Brzeski called the reading “almost too good to be true.” Capital Economics’ Jack Allen-Reynolds said it supported a rise in third-quarter GDP. The ECB raised rates earlier in September; markets were pricing three more hikes by the end of June 2027.