Eurozone PMI October 2016


Eurozone: Composite PMI rises to highest level seen this year

October 24, 2016

Recent data suggest that business activity in the Euro area picked up momentum at the start of Q4. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, rose from 52.6 in September to 53.7 in October, the highest reading since December 2015. The result overshot market analysts’ expectations of no change to the index.

October’s upturn reflected stronger activity in both the manufacturing and services sectors. Conditions in the manufacturing sector were the strongest in 30 months amid strong inflows of new work and an increase in employment. Service sector output also rose, although hiring was muted. Price pressures showed signs of picking up, with the largest rise seen in over five years.

Regarding the two largest Eurozone economies, economic conditions improved notably in Germany but faltered in France. Elsewhere in the region, economic momentum picked up but remained relatively weak. Commenting on the result, IHS Market analysts stated that, “policymakers will be encouraged by signs of both stronger economic growth and rising price pressures, and the prospect of a robust fourth quarter will fuel further speculation of a possible tapering of QE purchases by the ECB.”

FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.6% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, panelists expect the economy to expand 1.4%, which is unchanged from last month’s forecast.

Author: Angela Bouzanis, Senior Economist

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Eurozone PMI Chart

Euro PMI October 2016

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction
Source: IHS Markit

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