The eurozone's private sector grew in September at nearly its fastest pace in 3.5 years

Eurozone private sector activity grew at its fastest pace in almost three and a half years in September. According to flash PMI data released by S&P Global on Wednesday, growth was recorded in both the services and manufacturing sectors.

The Flash Eurozone Composite PMI Output Index rose from 52.0 in August to 53.1 in September, reaching its highest level since April 2023. The index has now remained above the 50 mark for three consecutive months, indicating growth in private sector activity.

The services sector's Business Activity Index rose from 51.6 to 53.0, reaching a 10-month high. The Manufacturing Output Index edged up from 53.3 to 53.4, hitting a 55-month high. Meanwhile, the Manufacturing PMI remained unchanged at 52.7.

Growth was broad-based across the Eurozone. Germany's economic activity expanded for a third consecutive month, recording its fastest pace in nearly a year. In France, activity increased for the first time in 10 months. The rest of the Eurozone also posted solid growth.

New orders rose for a third consecutive month, showing the fastest pace of increase since May 2022. Export orders also grew for a second month, driven mainly by improved demand in the manufacturing sector. This is particularly notable given that export orders had previously been declining for 53 consecutive months.

Employment rose for a second consecutive month, though the increase was modest. New jobs were created primarily in the services sector, while employment in manufacturing remained unchanged. Job growth in Germany was the strongest since mid-2023, while companies in France continued to cut staff numbers.

At the same time, inflationary pressures intensified. Both input costs and prices charged for final goods and services rose at their fastest pace in four months. Price increases were recorded in both the manufacturing and services sectors and across all of the Eurozone's major economies.

However, business confidence regarding the outlook for the next 12 months fell to a three-month low. The weakening in optimism was particularly pronounced in France, which offset relatively stable expectations in Germany.

According to Chris Williamson, Chief Economist at S&P Global Market Intelligence, the PMI data suggest that Eurozone GDP is growing by around 0.4% quarter-on-quarter. He noted that, against a backdrop of geopolitical challenges and rising prices, the economy's resilience could prompt the European Central Bank to raise interest rates once more before the end of the year.

According to S&P Global's latest assessment, high energy prices and tighter financial conditions remain significant risks to the global economy, making the direction of inflation and monetary policy especially important.