The eurozone economy ended the third quarter on a strong note, according to the latest Purchasing Managers' Index figures from data specialist IHS Markit. Growth in business activity picked up to its highest since May. This is one of the strongest gains seen over the past six years, says IHS Markit.
The headline Eurozone PMI rose to 56.7 in September, up from 55.7 in August (these figures are ‘flash’ estimates based on approximately 85% of final replies, notes IHS Markit; final September data are published on 2 October (manufacturing) and 4 October (services and composite indicators).
Inflows of new orders showed the largest monthly increase since April 2011. This represented a renewed surge in demand after the pace of new order growth had slowed in the two previous months.
- Eurozone PMI Composite Output Index at four-month high (56.7)
- Eurozone Services PMI Activity Index at four-month high (55.6)
- Eurozone Manufacturing PMI Output at 77-month high (59.5)
- Eurozone Manufacturing PMI at 79-month high (58.2)
The survey says
Chris Williamson, chief business economist at IHS Markit, said the survey data point to 0.7% gross domestic product growth for the third quarter. Along with accelerating momentum this bodes well for a buoyant end to the year, he suggests.
Manufactures cited the stronger euro as a concern among manufacturers. As yet, it appears to have had only a modest impact on exports, he adds. Manufacturing remains a major driver of the current upturn. Export sales are playing an important role. They push order books higher and encourage further investment in capacity expansion.
But this has implications beyond the headlines. “The rise in business activity and accompanying build-up of price pressures will fuel expectations that the European Central Bank is poised to announce its intention to rein back some of its stimulus, reducing its asset purchases in 2018,” states Williamson.
Behind the detail
The Eurozone PMI is based on original survey data collected from a representative panel of around 5,000 companies based in the euro area manufacturing and service sectors. National manufacturing data are included for Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece.
National services data are included for Germany, France, Italy, Spain and the Republic of Ireland. The flash estimate is typically based on approximately 85%–90% of total PMI survey responses each month. It is designed to provide an accurate advance indication of the final PMI data, explains IHS Markit.