The eurozone economy registered a mild growth acceleration at the start of the final quarter, with the rate expansion edging up from September’s four month
low. At 53.9, the final Markit Eurozone PMI® Composite Output Index signalled growth for the twenty-eighth successive month, coming in only slightly below the earlier flash estimate of 54.0.
Output increased in both the manufacturing and service sectors, signalling a broad-based upturn, with rates of growth ticking higher in both cases. Services recorded the slightly sharper expansion of the two for the eleventh straight month. Underpinning the faster expansion of economic activity was a marginal improvement in the rate of increase in new business. New orders rose at the quickest pace for six months, which in turn maintained the pressure on capacity at
manufacturers and service providers alike as highlighted by rising levels of outstanding business.
Rates of expansion edged higher across all of the ‘big-four’ economies, with Spain ranking highest among these for both output and new orders. Although the pace of expansion in France rose to a four-month high, it remained below those seen for the other nations covered by the survey.
With demand and backlogs of work both increasing, job creation was recorded across the currency union for the twelfth straight month in October. Moreover, the rate of increase in workforce numbers picked up from September’s eight-month low. Jobs growth was strongest in Ireland and Germany, while solid increases in employment were also signalled in Italy and Spain. Marginal job cuts were reported in France, although the pace of reduction eased over the month.
Inflationary pressures remained weak during October. Average input costs rose only moderately, as a commodity-related drop in manufacturers’ purchasing costs was offset by higher wages and salaries at service providers. Meanwhile, average output prices fell slightly for the first time in three months.
The Eurozone Services Business Activity Index posted 54.1 in October, up from September’s seven-month low of 53.7 but below the earlier flash estimate of 54.2. The headline index has stayed above the neutral 50.0 mark since August 2013. Business optimism remained positive and in line with that signalled in the prior month.
Ireland was the strongest performer among the nations covered by the survey during October, despite seeing its rate of increase in business activity decelerating to the weakest since February 2014. Solid output growth was also signalled across the ‘big-four’ euro area economies, with mildly stronger expansions seen in each case.
Underpinning the latest rise in eurozone service sector activity were improved levels of new business, rising backlogs of work and increased employment. New orders expanded at the fastest pace since July, while the pace of job creation rose to one of its quickest during the past four-and-a-half years.
Staffing levels were raised further in Germany, Spain and Ireland, with the latter two also seeing their respective rates of increase strengthen. Employment rose in Italy following modest cuts in September, while payroll numbers were broadly unchanged in France.
Average prices charged for services in the eurozone fell slightly during October, having risen for the first time in just over four years in September. Output prices increased in Germany, Spain and Ireland, but fell in France and Italy. Input costs meanwhile rose moderately, with the rate of inflation the fastest in three months but still well below the long-run series average. There were some reports among companies of higher costs reflecting increased wages and salaries.