Composite PMI
Actual: 53.1
Previous: 52.0
Highest in 41 months
Services PMI
Actual: 53.0
Previous: 51.6
Highest in 10 months
Manufacturing Output PMI
Actual: 53.4
Previous: 53.3
Highest in 55 months
Manufacturing headline PMI
Actual: 52.7
Previous: 52.7
Unchanged pace
The real signal, broad-based acceleration
Third consecutive month of expansion, the fastest since April 2023
New orders up for the third month, the strongest pace since May 2022
Germany leading, third consecutive month of expansion, fastest pace in a year
France back in positive territory for the first time in 10 months, a notable turnaround signal
German manufacturing, the real engine
Best growth spell in over 4 years per the commentary
Driven by rising AI and defense spending
Consistent with the AI theme as a cross-cutting macro factor already documented in this series (BOJ, US services ISM)
Prices, intensifying inflationary pressures
Input costs and output prices rising at the sharpest rates in 4 months
Acceleration registered in both manufacturing and services
Williamson's commentary explicitly attributes this to energy prices tied to the Middle East conflict
Full consistency with the pattern documented throughout this series (Brent above $100, US PPI, UK/Canada/eurozone CPI), the energy shock continues spreading into European costs
Employment, a positive but measured signal
Up for a second consecutive month, modest pace
Strongest German job creation since mid-2023
Decline in France, a sharp contrast with the rest of the zone
Confidence, a discordant signal
Year-ahead output confidence weakened to a three-month low
Weakness concentrated among French firms, with Germany stable and the rest of the zone slightly improving
Notable gap between strong current activity and more cautious forward confidence, worth watching
The key point, Williamson's explicit ECB call
The chief economist judges that resilient growth amid geopolitical tension and rising prices will likely embolden the ECB to hike again before year-end
He explicitly puts an October hike "very much on the table," rather than waiting for December
Consistent with the 25bp hike the ECB already delivered and documented earlier in this series, this PMI could accelerate the timeline rather than confirm a pause
Implications
EUR: bullish bias reinforced, the combination of strong growth plus accelerating inflation is exactly the setup that pushes a central bank toward faster rather than slower tightening
Consistent with the broad central bank repricing already documented in this series, where the ECB already showed 37bp of hikes priced by year-end, a hawkish surprise on this PMI could push that figure higher
EUR/USD: with the Fed having delivered a message judged less hawkish than the market expected (cf. prior FOMC analysis), the momentum gap could now favor the euro if the ECB confirms an October rather than December hike
EUR/GBP: with the BoE staying in a cautious holding pattern despite the three-vote dissent documented earlier, the gap could widen in the euro's favor if the ECB moves first
Point of caution
This is flash data (around 85% of usual responses), final figures land October 1 (manufacturing) and October 5 (services), revision risk exists
The confidence drop to a three-month low shouldn't be ignored, current activity resilience may not hold if geopolitical uncertainty persists and weighs on upcoming investment decisions
Whether the ECB hikes in October rather than December will likely hinge on confirmation of these figures and oil's trajectory ahead of the next meeting