Eurozone private-sector economic activity improved in September

Germany's services boom offset France's slump

Eurozone private-sector economic activity expanded in September at the fastest pace in about 16 months. Germany's services sector performed strongly, offsetting France's slump.

On the 23rd (local time), S&P Global's compiled September Eurozone composite purchasing managers' index rose from 51 in August to 51.2. This index indicates contraction at 50 or below and growth at 50 or above.

France has been struggling with political and social uncertainty after the collapse of the government and the failure to agree on budget cuts. By contrast, Germany's services sector grew at the fastest pace.

Meanwhile, Eurozone manufacturing briefly rose above the 50 threshold last month, escaping years of weakness, but this month it fell back below 50 and returned to contraction.

Cyrus de la Rubia, an economist at Hamburg Commercial Bank, noted, "The Eurozone is on a growth trajectory, but there is a long way to go before we see tangible momentum."

The Eurozone continued to be subdued in the first half of the year due to uncertainty about President Trump's tariff policies, but has shown improvement since August. Early in the year activity was supported by front-loaded demand ahead of tariffs, but as this trend reversed, Germany slipped into a downturn in Q2.

The European Central Bank (ECB) said that with uncertainty troubling exporters reduced by the conclusion of a trade deal between the EU and the US, growth is expected to remain steady for the remainder of the year.

A resilient labor market, wage growth, and increased fiscal spending on defense and social infrastructure are expected to support Eurozone economic growth. The ECB forecasts 1.2% growth in 2025 followed by 1% growth the next year.

Meanwhile, inflation has held at the 2% target for three months, reinforcing the central bank's commitment to controlling inflation. However, some officials stressed that the outlook remains uncertain due to various risks surrounding inflation.

Jeong-A Kim, guest reporter kja@hankyung.com