Eurozone September flash services PMI 51.4 vs 50.5 expected | investingLive

• Prior 50.5
• Manufacturing PMI 49.5 vs 50.7 expected
• Prior 50.7
• Composite PMI 51.2 vs 51.1 expected
• Prior 51.0

The readings this month were a mixed bag as the services sector pulled up business activity while the manufacturing sector slumped back into contraction. At the balance, there was still marginal growth in the overall euro area private sector but nothing to really shout about. The German economy has now sort of dragged itself out of the mud but in turn, France is the one falling into the rut. The ECB might be on pause mode but the report here shows further signs of cooling in price pressures, so that will be something to note. HCOB mentions that:

“The eurozone is still on a growth path. Manufacturing output has increased for the seventh month in a row, and business
activity in the services sector has been expanding almost continuously since February 2024. That said, we’re still a long way
from seeing any real momentum. Just consider that the Composite PMI, which combines activity in both manufacturing and
services, hit a modest 51.2 points and reached with this a 16-month high.

The outlook for manufacturing is looking a bit cloudy. Production is still growing, but the pace is being dragged down by
France, where the government shake-up in early September likely threw a wrench into companies’ production plans. Apart
from this, hopes for an acceleration in growth are not justified as new orders have dropped significantly in both Germany and
France. In the medium term, higher defence spending could drive up demand for industrial goods. A more immediate impact
might come from Germany’s so-called investment booster and the infrastructure package. Still, according to the survey,
confidence in rising output has actually dipped in both Germany and the eurozone overall.

Hiring, which was already pretty sluggish this year, has now come to a halt. That’s due to slower hiring in services and faster
job cuts in manufacturing. Germany, in particular, has been a drag here. It is possible that the eurozone’s official
unemployment rate, which fell to a seasonally adjusted 6.2% in July, has now bottomed out.

Cost inflation in the services sector, which the European Central Bank watches closely, has eased slightly but remains
unusually high given the fragile economic backdrop. Selling prices have cooled more noticeably, which might just prompt the
ECB to consider whether a rate cut before year’s end could be back on the table.”