The S&P Global Eurozone Manufacturing PMI advanced for a third straight month to 52.9 in September, up from 52.7 in August and above the flash estimate of 52.7, reaching its highest level since May 2022. A reading above 50 signals expansion, and the latest print puts the sector firmly in growth territory after a prolonged slump.
Investment goods drive the rebound
Demand for capital equipment and machinery powered the improvement, with capital-goods production posting its strongest expansion since the post-pandemic bounce. New orders rose at the fastest clip since early 2022, buoyed by export growth that hit a four-and-a-half-year high. The output sub-index climbed to 53.6, a 55-month peak, and business confidence firmed to its best level since February.
Broad-based but uneven across members
The recovery spread across the bloc. The Netherlands led the expansion, while Germany, the largest economy, recorded solid growth. France, Italy and Spain managed more modest gains. Consumer-goods demand, by contrast, stayed soft as elevated living costs continue to squeeze household budgets, creating a split between industrial strength and retail weakness.
Price pressures reassert themselves
Input costs and factory-gate prices both accelerated in September, reviving inflation concerns. Official data due Friday is forecast to show eurozone consumer inflation jumping to 3.6 percent from 3.2 percent in August, the highest since September 2023. Traders have responded by pricing in three ECB rate hikes by mid-2027, a shift that could tighten financial conditions just as manufacturing finds its footing.
Outlook hinges on policy reaction
The divergence between buoyant investment demand and fragile consumer spending complicates the growth picture. If inflation stays elevated, the ECB may keep rates restrictive for longer, risking a chokehold on the very industrial recovery the data now celebrate.