Euro zone economy grows at fastest pace in more than two years, PMI shows
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Service sector activity accelerated and demand conditions improved in the euro zone economy in October.
PHOTO: EPA
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LONDON - The euro zone economy expanded at its fastest rate since May 2023 in October, breaking out of the subdued growth pattern seen earlier in 2025 as service sector activity accelerated and demand conditions improved, a survey showed.
The HCOB Eurozone Composite Purchasing Managers’ Index, compiled by S&P Global, climbed to 52.5 in October from 51.2 in September, marking the 10th consecutive month of growth and reaching its highest level in 29 months.
Purchasing Managers’ Index (PMI) readings above 50.0 indicate growth in activity.
“Finally, there’s something positive to report about the euro zone economy again. The services sector saw a solid upswing in October. When it comes to new business, you’d have to go back to May of last year to find a similarly strong increase,” said Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
New business volumes expanded at the steepest pace in 2½ years, driven entirely by the services sector while manufacturing orders stagnated. The composite new orders index jumped to 52.1 from 50.6.
Service providers lifted their activity index to 53.0 from September’s 51.3, reaching a 17-month high.
Spain led the pack with a sharp composite 56.0 reading, its best performance in 10 months, while Germany’s economy showed surprising strength with a rise to 53.9, its highest level in nearly 2½ years.
Italy and Ireland also recorded solid expansions at 53.1 and 53.7, respectively. France remained the only major euro zone economy in contraction territory, with its index falling to an eight-month low of 47.7.
“France is clearly putting the brakes on euro zone economic growth. On the bright side, it’s not just Germany where the expansion rate has picked up significantly. Even when excluding Germany and France, the composite PMIs for the rest of the euro zone show the strongest growth in 2½ years,” Dr De la Rubia added.
Overall employment growth accelerated to a 16-month high, reversing September’s marginal drop as service firms ramped up hiring to meet increased demand, though manufacturers continued to shed jobs at a faster pace.
Price trends diverged, with composite input cost inflation cooling to a three-month low while companies raised their selling prices at the strongest rate in seven months. The European Central Bank kept interest rates unchanged at 2 per cent for the third meeting in a row last week and repeated policy was in a “good place”. It has finished cutting interest rates as inflation holds around its 2 per cent target and the economy marches steadily on, a Reuters poll found in October. REUTERS
