Eurozone business activity reaches 41-month high in September as price pressures re-emerge
The S&P Global Eurozone Composite PMI rose to 53.1 in September, driven by services and an end to a 39-month export slump, even as input costs rose across the continent.
Eurozone expansion accelerates
Private sector activity across the euro area expanded at its fastest rate in 41 months in September, according to survey data from S&P Global. The headline composite Purchasing Managers' Index rose to 53.1 from 52.0 in August, marking the highest reading since April 2023 and completing the currency bloc's strongest quarter since the second quarter of 2022. Growth was led by the services sector, where the index climbed from 51.6 to 53.0, while the manufacturing PMI moved up from 52.7 to 52.9. Demand picked up across both sectors, with export orders ending a 39-month contraction and overseas orders rising at their fastest pace in more than four and a half years.
Chris Williamson, chief business economist at S&P Global Market Intelligence, evaluated the quarter's output trajectory.
The collective signal from the PMI surveys is one of GDP growing at a 0.4% quarterly rate, with momentum accelerating as we head into the fourth quarter.
- Eurozone Composite
- 53.1
- Eurozone Services
- 53
- Eurozone Manufacturing
- 52.9
- UK Services
- 52.1
- Italy Services
- 51.7
- Italy Composite
- 51
Divergence across member states
National performances varied across the euro area, with Spain registering the fastest expansion, followed closely by Ireland. Germany recorded its strongest recovery rate since early 2022, aided by the fastest rise in factory orders in over four years. In contrast, France and Italy posted more modest gains. French private sector activity returned to growth after summer heat disruptions, while Italian business activity cooled. Italy's composite PMI dropped from 53.6 in August to a three-month low of 51.0 in September, driven by a slowdown in services from 55.2 to 51.7.
Separately, Italy's national statistics agency Istat confirmed on Monday that gross domestic product rose 0.2% in the second quarter of 2026, identical to the provisional figure from 1 September. On an annual basis, Italian GDP grew 1.0%, bringing the calendar-adjusted carry-over effect for 2026 to 0.8%. Italian domestic consumption and gross fixed capital formation each increased by 0.2% quarter on quarter, whereas industrial output contracted 0.6% and agricultural value added declined 0.1%.
- Services
- 0.4 %
- Final consumption
- 0.2 %
- Gross fixed capital
- 0.2 %
- Total GDP
- 0.2 %
- Agriculture
- -0.1 %
- Industry
- -0.6 %
Rising input costs and rate expectations
Cost pressures intensified across European businesses during September. In the euro area, both input and output prices increased at their fastest pace in four months, driven by higher energy costs and service sector adjustments. Although overall employment growth weakened because slower hiring in services outweighed factory job additions, business confidence remained steady. Chris Williamson noted that the rebound in price growth could influence European Central Bank decision-making.
A renewed upturn in price pressures signalled by the survey meanwhile hints at euro zone inflation running closer to 4% than the ECB's 2% target.
Financial markets are currently pricing in more than two ECB interest rate increases by the middle of next year. In the United Kingdom, services growth slowed as the S&P Global UK Services PMI fell to 52.1 in September from 52.5 in August. Tim Moore, economics director at S&P Global Market Intelligence, cited surging fuel prices linked to Middle East conflict as the primary factor pushing prices charged by British service firms to their highest level since May.
