Eurozone growth edges higher in September, reaching 16-month peak

Investing.com -- The eurozone economy continued its modest expansion in September, with growth reaching a 16-month high as the HCOB Eurozone Composite PMI Output Index rose to 51.2 from 51.0 in August.

The services sector led the improvement with the Services PMI Business Activity Index climbing to 51.3 from August’s 50.5, marking an 8-month high, according to data released Friday by S&P Global.

While the expansion marked the fourth consecutive monthly increase, growth remained below the survey’s long-run trend rate of 52.4, with only a marginal improvement in new business.

Germany played a central role in the broader uptick, with its Composite PMI reaching a 16-month high. Spain recorded the strongest growth among eurozone nations at 53.8, while France remained the only major economy in contraction territory with a reading of 48.1.

"Things are running a little bit more smoothly in the service sector. After almost stagnating in August, business activity picked up more strongly in September," said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank.

Despite the output growth, employment levels decreased for the first time since February, though the reduction was fractional. Companies continued to work through backlogs, with the pace of depletion accelerating to the quickest in three months.

Inflation pressures moderated in September, with both input costs and output charges increasing at slower rates. Service sector price inflation, closely watched by the European Central Bank, declined but remained slightly above long-term averages.

Business confidence improved for the first time since June, reaching its second-highest level since July 2024, though expectations remained relatively subdued by historical standards.

New export orders continued to decline, extending the current sequence of contraction to over three-and-a-half years.

"The composite PMI has been in expansionary territory for the entire third quarter, so it can be assumed that GDP has grown in that quarter. Our nowcast, which takes the PMI into account alongside other indicators, calculates a growth rate of 0.4 percent compared to the previous quarter," added de la Rubia.

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