Eurozone Composite PMI Falls to 51.9 in October as Cost Pressures Intensify
Key Facts
The eurozone’s preliminary composite Purchasing Managers’ Index fell to 51.9 points in October from 53.1 points in September, its lowest reading since June, according to S&P Global data reported by Reuters. The reading was below the Reuters poll forecast of 52.7 points, signaling slower momentum in private-sector activity than in the previous month. The index nevertheless remained above 50 points, the threshold separating growth from contraction. In September, the index had risen from 52.0 points in August to its highest reading in more than three years. October’s decline ended that rapid improvement, while regional activity remained in growth territory.
France emerged as a source of pressure on activity, as companies attributed weaker demand for goods and services to rising political uncertainty and economic pressures. “The September rebound in economic activity proved short-lived,” said Joe Hayes of S&P Global. He cited tighter financial conditions and increased political pressures in October as factors behind the weaker momentum. In Germany, private-sector activity growth also slowed, with the composite index falling to 52.8 points in October from 53.8 points in September. It remained above the growth threshold for the fourth consecutive month, while Phil Smith of S&P Global described the recovery in the eurozone’s largest economy as fragile.
Eurozone activity and new orders remained in expansion for the fourth consecutive month, but new orders recorded their slowest pace of growth during this run. By contrast, export orders rose for the third consecutive month, following about four and a half years of continuous monthly declines. The divergence points to continued improvement in external demand alongside slower growth in overall demand. Employment in the region also came close to stalling in October. Services job creation slowed to a five-month low, while manufacturing employment fell after improving for two months.
Business confidence in the eurozone fell to a five-month low, with the sharpest decline in optimism in manufacturing. Meanwhile, input costs accelerated for the second consecutive month as energy, fuel and transport costs rose. Companies linked some of these pressures to the Middle East war. “Input costs accelerated for the second consecutive month,” said Chris Williamson of S&P Global. Despite the higher burden, companies raised selling prices at a slower pace than in September, highlighting ongoing cost pressures and their slower pass-through to final prices.
The activity and cost readings come as investors watch the European Central Bank’s monetary policy path. A Reuters poll pointed to the deposit rate holding at 2.50% at the next meeting, followed by a 25-basis-point increase in December; these are poll participants’ expectations, not an announced decision by the bank. The bank’s official inflation target is 2%. Among upcoming economic indicators, Germany’s Ifo Institute will release its October business climate index on October 26, 2026, at 10:30 Central European Time. In available foreign-exchange market data, the euro-dollar pair closed at 1.11898 on October 23, compared with a close of 1.12166 the previous day.