Eurozone September Composite PMI Rises to 53.1, Hitting Over Three-Year High
nashnova research
The eurozone's September composite PMI jumped to 53.1 — a three-year-plus high and well above the 51.7 consensus — driven by a surprise services rebound and steady manufacturing expansion, but rising energy costs from the Middle East conflict are pushing the ECB closer to an October rate hike.
What made this PMI reading so strong?
The composite PMI rose from 52.0 in August to 53.1, far above economists' forecast of 51.7 — a three-year-plus high.
Services PMI — a gauge of activity in hospitality, finance, logistics and other service sectors — jumped from 51.6 to 53.0, a near-one-year high and the biggest upside surprise.
Manufacturing PMI held at 52.7, but the output sub-index edged up to 53.4, a 55-month high. This means → factories are not just booking orders — actual production is accelerating too.
How strong is the demand signal?
New orders grew at the fastest pace in over four years; export orders — including intra-eurozone trade — expanded in tandem.
Companies ramped up hiring to meet rising demand, pulling the labour market along with the order book.
In plain terms = this is not just better numbers on paper — firms are expanding output, adding headcount and stocking up. The expansion is real.
What risk is hiding behind the good news?
The Middle East conflict has pushed energy prices higher, driving up input costs; firms are passing part of the increase on to consumers.
This means → the economy is accelerating, but inflation pressure is rising in lockstep — the "growth + rising prices" mix central bankers least want to see.
S&P Global chief business economist Chris Williamson said: "A renewed increase in inflationary pressures in September was not surprising, with the ongoing Middle East conflict driving energy prices higher."
What will the ECB do next?
The ECB has already hiked rates twice since the Iran war began; markets now price in three more hikes by year-end, with the earliest possible as soon as October.
ECB officials remain upbeat on the economy and have raised their full-year growth forecast to 0.9%.
This reflects the central bank's view that the economy can handle higher rates. But Williamson noted that whether expansion can hold up under continued rate increases will be the key test of this recovery's durability.
Growth has remained resilient in the face of geopolitical pressures and rising prices, which will likely further cement the ECB's resolve to hike again before year-end.
Chris Williamson
Chief Business Economist, S&P Global Market Intelligence
(September PMI data commentary)
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