A recent survey showed that economic activity in the Eurozone continued its positive trajectory during September, recording its fastest growth rate in 16 months, but the indicators also reveal challenges that hinder the sustainability of this momentum.
The composite Purchasing Managers’ Index (PMI ) issued by S&P Global in conjunction with HCOB rose to 51.2 points compared to 51.0 in August, reflecting a slight but significant expansion, as any reading above 50 indicates economic growth.
However, new orders have stopped growing, registering a breakeven level of 50.0 points, which may raise concerns among investors about the continuation of the recovery.
The services sector was the main driver of growth, with its index jumping to 51.4 points, its highest level in nine months, while the manufacturing sector returned to contraction at 49.5 points.
At the country level, Germany showed strong performance with its fastest growth since May 2023, while France continued to contract for the 13th consecutive month.
On the other hand, employment stabilized after six months of growth, as job creation in services slowed and factories continued to reduce their workforce.
Inflationary pressures have eased somewhat, with price increases slowing and manufacturing input costs declining for the first time in three months, while price pressures in the services sector remain high but at a slower pace.
These developments come at a time when the European Central Bank has kept interest rates unchanged, amid signs that the cut cycle is ending, while closely monitoring inflation and services levels.
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