Eurozone Output Growth Hits Three-and-a-Half-Year High

The S&P Global Eurozone Composite PMI rose to 53.1 in September 2026, up from 52.0 in August and above market expectations of 51.7, according to a preliminary estimate. The latest reading marked a third consecutive month of expansion in business activity, with growth accelerating to its fastest pace in almost three-and-a-half years. Growth strengthened across both manufacturing and services, reaching 55- and 10-month highs, respectively. Germany expanded for a third straight month at its fastest pace in just under a year, while France returned to growth for the first time in 10 months. New orders rose at their fastest pace since May 2022, driving the first increase in backlogs since June 2022. Employment also increased, although the pace of job creation remained modest. Meanwhile, inflationary pressures intensified, with input costs and output prices rising at their fastest rates in four months. Business confidence weakened again and remained relatively subdued.

The S&P Global Eurozone Composite PMI came in at 52.0 in August 2026, broadly in line with the preliminary estimate of 52.1 and little changed from July’s eight-month high. The latest data point to another solid quarter of growth in Q3, supported by improving industrial activity and a recovery in services following the initial impact of the surge in energy prices at the start of the Middle East conflict. New orders increased at the same solid pace as in July, while new export orders rose for the first time in four and a half years. Employment also expanded for the first time this year, although backlogs continued to decline at a slower pace. Inflationary pressures were broadly stable, with input costs easing slightly while output prices rose at the same pace as in July. However, price pressures remained elevated by historical standards. Business confidence was unchanged.

The Eurozone flash composite PMI rose to 52.1 in August 2026 from 52 in July, reaching a nine-month high and exceeding expectations of 51.7. Growth was supported by a stronger manufacturing performance, with factory output increasing at its fastest pace in four and a half years. Germany was a major contributor, recording its strongest manufacturing expansion since January 2022. New orders also increased, while export demand returned to growth for the first time in four and a half years, suggesting an improvement in external demand. Companies responded to the stronger activity by increasing employment, providing further evidence of resilience in the regional economy. At the same time, price pressures showed signs of easing, pointing to a gradual moderation in inflationary pressures. However, business confidence weakened during the month and remained relatively subdued, highlighting continued uncertainty over the economic outlook despite the stronger activity data.