Business activity in the eurozone grew fastest in three years
Business activity in the eurozone accelerated in September to its highest level in more than three years. The currency bloc's economy is proving more resilient to rising energy prices and the war in the Middle East than economists had expected.
This is reported by Bloomberg citing preliminary data from S&P Global.
The composite PMI index for the eurozone, which covers manufacturing and services, rose in September to 53.1 points from 52 points in August. A reading above 50 indicates expansion of economic activity.
The result was significantly better than forecasts. Economists polled by Bloomberg on average expected the indicator to decline to 51.7 points.
The main positive surprise was the acceleration of the services sector. Meanwhile, manufacturing is also strengthening, with additional demand coming from investments in artificial intelligence and increased defense spending.
The situation also improved in the bloc's two largest economies. In Germany, business activity grew at the fastest pace since October 2025, and France unexpectedly showed the best dynamics in more than two years.
New orders in manufacturing and services also improved, which may indicate that the positive momentum will continue at the start of the fourth quarter.
At the same time, stronger economic indicators are accompanied by renewed intensification of price pressures. Rising energy prices due to the conflict in the Middle East are increasing company costs, which they partly pass on to consumers.
This creates an additional argument for a tighter policy by the European Central Bank. On September 10, the ECB, for the second time since the outbreak of the war with Iran, raised key interest rates by 25 basis points. The deposit rate rose to 2.5%.
The regulator simultaneously improved its economic assessment: it now expects eurozone GDP growth of 0.9% in 2026. The ECB itself explained the revision by the economy's greater-than-forecast resilience. At the same time, average inflation this year, according to the central bank, will be around 3%, remaining above the 2% target.
OECD also took a more optimistic view of the eurozone economy. In its September forecast, the organization raised the estimate for eurozone growth in 2026 to 1%. Forecasts were improved, in particular, for Germany, Italy, and Spain, while expectations for France worsened.
At the same time, prospects remain dependent on the situation in energy markets. Further rises in oil and gas prices could simultaneously boost inflation and weaken consumption and investment, presenting the ECB with a more difficult choice between fighting prices and supporting economic growth.
Based on materials from: Bloomberg, European Central Bank, OECD
