Eurozone Private Sector Growth At 17-Month High

(RTTNews) - The euro area private sector growth accelerated to a 17-month high in October as new orders registered a steeper growth despite continuing fall in business from abroad.

The flash HCOB composite output index climbed unexpectedly to 52.2 in October from 51.2 in September. The reading was expected to fall to 51.0.

The index remained above the 50.0 no-change mark for the tenth straight month in October, suggesting expansion. Moreover, the score was the joint-fastest in just under two-and-a-half years, equal with that seen in May 2024.

Growth was registered across both monitored sectors, and led by services where the latest expansion was the strongest since August 2024. Manufacturing production rose for the eighth straight month.

The services Purchasing Managers' index rose to a 14-month high of 52.6 from 51.3 in the previous month, while it was expected to fall to 51.2.

The manufacturing PMI hit a two-month high of 50.0. Economists had forecast the index to remain unchanged at September's level of 49.8.

Companies raised their activity in response to a steeper growth in new orders. The overall expansion was led by the services sector. However, new business from abroad continued to fall in October.

Stronger growth in output and new orders contributed to a renewed increase in staffing levels. The latest growth in employment was the joint-fastest in 16 months. Backlogs of work stabilized in October, ending a period of depletion stretching back to April 2023.

Despite stronger expansions in output and new orders in October, business confidence deteriorated to a five-month low and was weaker than the series average.

Regarding prices, the survey showed that input price inflation eased to a three-month low. By contrast, output prices increased at the fastest pace in seven months.

Manufacturers increased their selling prices for the first time in six months and service providers lifted their charges more sharply.

"The European Central Bank, which pays particular attention to inflation in the service sector, is likely to see this data as confirmation of its stance not to implement further interest rate cuts," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

France has become a drag on the eurozone economy, while business activity in Germany brightened significantly in October.

Germany's private sector reported its strongest growth for almost two-and-a-half years in October, driven in large part by a solid growth in services activity. The flash composite output index climbed to a 29-month high of 53.8 in October from 52.0 in September.

The factory PMI edged up to 49.6 from 49.5 a month ago. At 54.5, the services PMI rose to a 29-month high from 51.5 in September.

France's private sector economy slipped into a deeper downturn in October as activity declined for a fourteenth straight month and at the fastest pace since February. The flash HCOB composite output index dropped for the second straight month, to 46.8 from 48.1 in September. Steeper declines in output were seen in both manufacturing and services.

The services PMI hit an eight-month of 47.1 in October from 48.5 in September. The manufacturing PMI rose to 48.3 from 48.2 in the prior month.