Eurozone business activity accelerated in October, with PMI Composite rising to a 17-month high of 52.2 from 51.2, signaling the strongest expansion since mid-2024. The pickup was driven by services, where PMI Services index jumped from 51.3 to 52.6, a 14-month high, while Manufacturing finally edged up to the neutral 50.0 mark after months of contraction.
However, the upturn remains uneven across major economies. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, noted that France has increasingly become a drag, with its rate of contraction accelerating for two straight months amid political turmoil and budget disputes under Prime Minister Sébastien Lecornu. In contrast, Germany’s outlook “brightened significantly”, helping to lift the bloc’s overall figures. Still, manufacturing has been “stagnating for practically six months,” de la Rubia said, and weak new orders leave “little hope of a turnaround.”
Inflation trends offer some comfort for policymakers. Price pressures in the services sector — a key focus for the ECB — “remain moderate,” with sales price inflation slightly higher but still near long-term averages. The PMI data are therefore unlikely to alter the ECB’s cautious stance, reinforcing expectations that officials will hold off on further rate cuts until clearer signs of sustained disinflation emerge.
