Eurozone business activity growth accelerates as demand jumps: PMI

Eurozone business activity unexpectedly grew at a faster pace in October as companies received new orders at the quickest rate in 2-1/2 years, suggesting the bloc’s economy gained momentum at the start of the final quarter, a survey showed on Friday.

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The HCOB Flash Eurozone Composite PMI, compiled by S&P Global, rose to 52.2 in October from 51.2 in September, marking the tenth consecutive month of expansion and reaching a 17-month high and confounding expectations in a Reuters poll for a dip to 51.0.

PMI readings above 50.0 indicate growth in activity.

“October's flash PMIs suggest that the Eurozone economy may have picked up a bit at the start of the fourth quarter,” said Adrian Prettejohn at Capital Economics.

“At the country level, there was a stark contrast between Germany and France.” In France, activity declined faster than expected as demand for goods and services in the euro zone’s second-biggest economy weakened further amid a volatile political climate. But in Germany, Europe's largest economy, the private sector recorded its strongest growth in nearly 2-1/2 years, buoyed by a robust rise in services activity. Germany's strong and much higher-than-expected reading gave the euro a boost. In Britain, outside the European Union, businesses could be at a turning point as the manufacturing sector showed signs of a recovery and inflation pressures receded, although caution is still weighing on firms ahead of next month's government budget.

Services activity led the euro zone’s expansion, with its PMI climbing to 52.6 from 51.3 in September, reaching a 14-month high. The Reuters poll predicted 51.1.