Business activity across the eurozone picked up in September, a key survey showed Friday, growing by the fastest monthly rate since since May and showing economic recovery well underway.
A purchasing managers’ index (PMI) compiled by Markit ticked up to 56.7 in September after 55.7 in August, the group said in a statement. Analysts said the reading points to a sustained recovery, with some saying they may now need to upgrade their forecasts for economic growth in the single currency area.
Florian Hense at Berenberg said the September index level came in more than a full point higher than his bank’s forecast, which had been in line with the overall market consensus. He said there was now an “upside risk” for current growth estimates which had assumed a “moderation” of growth in the second half of 2017.
But there is “no sign yet of any slowdown in growth to come”, Hense said. The manufacturing component of the PMI alone beat forecasts by 1.0 points and services were ahead by 0.8 point.
“September’s rise in the euro-zone Composite PMI suggests that the recovery has regained momentum after a brief summer lull,” said Stephen Brown at Capital Economics. Powerhouse Germany did particularly well in September, according to the data, with analysts saying PMI growth was the strongest in more than half a decade.
France, the eurozone’s second-biggest economy, also had a strong reading, providing “more good news for Macron”, Berenberg’s Hense said, as French President Emmanuel Macron makes a push to implement controversial labor reforms.
The data are also fueling an ongoing debate about when the European Central Bank will tighten monetary policy after a long period of easy money.
Brown at Capital Economics said ECB policy makers may be “emboldened” by the fresh signs of a strong recovery, but markets should not get ahead of themselves given that inflation — a key trigger for rate moves is set to increase only gradually.