Euro zone businesses beat forecasts as growth holds strong

Euro zone businesses beat forecasts as growth holds strong

Services business was the main growth driver despite a slight retreat in growth rates this September.

In economic news, the eurozone economy ended Q3 with growth of business activity picking up to its highest level since May, according to IHS Markit, and one of the strongest gains seen over the past six years.

The PMI for manufacturing soared to 58.2 from 57.4, confounding expectations for a fall to 57.1 and chalking up its highest reading since February 2011.

It pointed out that the rise in business activity and inflationary pressures would fuel expectations the European Central Bank will, as has always been awaited, start to rein in its asset purchase programme. Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, jumped to 57.8 from 55.8 in the previous month.

Germany's labor market meanwhile continued to reap the benefits of growing workplace activity, with private sector employment rising at a robust pace that was broadly in line with the average seen across the year so far. The reading was better than economists' projection of 55.6.

"The survey data point to 0.7% GDP growth for the third quarter, with accelerating momentum boding well for a buoyant end to the year". The Euro-to-Dollar rate, on the other hand, was 0.14% higher at 1.1961. Improved performances were reported in both manufacturing and services in September. The output price index rose to 52.6 from 52.1.

France's composite PMI rose unexpectedly to a 76-month high of 57.2 in September.

"Companies are scrambling to expand capacity as fast as possible to meet orderbook growth, and increasing backlogs are presenting them with huge problems", said chief business economist Chris Williamson at IHS Markit. A Reuters poll had predicted no change from the 54.7 posted for last month.

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