Euro zone businesses beat forecasts as growth holds strong

Jon Howard
September 23, 2017

"The eurozone economy ended the summer with a burst of activity, with the PMI signalling renewed impetus to already-impressive rates of growth of output, order books and employment during September". Historical comparisons of the PMI with GDP indicate that the surveys point to the economy growing at an annualised rate of just over 2% in the third quarter. "The price indexes of the Composite PMI also picked up in September", said economist Stephen Brown at Capital Economics. The reading was the highest since April 2011 and far exceeded a consensus forecast in a Reuters poll of economists for a stable reading of 55.8.

At 54.6 in September, the seasonally-adjusted IHS Markit Flash U.S. Composite Purchasing Managers Output Index was down slightly from 55.3 in August, but still considerably above the 50.0 no-change value.

- A closely watched survey is showing that the eurozone economy, made up of the 19 countries that use the euro currency, has ended the third quarter on a strong note, in a development that further reinforces hopes about the state of the region's recovery. The euro gained 0.4 per cent to $1.1989, on track to end the week higher.

Markit also reported that Germany's private sector economy ended Q3 strong, with business activity growth accelerating to the fastest in nearly six-and-a-half years.

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The manufacturing index nudged up to 53.0 from 52.8, in line with expectations. "This rounds out a run of data that provide evidence of building pipeline inflation pressures". An index measuring output rose to a 61/2-year high of 59.5 from 58.3.

IHS Markit's Smith said increased capacity pressures suggested businesses would keep taking on extra staff for some time to come.

Companies in the bloc's dominant service industry also had a much better month than expected - their PMI rose to 55.6.

With activity thriving and new orders flooding in, their optimism also increased.

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