Eurozone Rebounds to Fastest Pace Since Mid-2023

Eurozone business activity accelerated in October, with the Composite PMI reaching its fastest pace since May 2023.

The HCOB Eurozone Composite PMI rose to 52.5 in October 2025, exceeding both the flash estimate of 52.2 and September’s 51.2. This marks the region’s quickest expansion since May 2023, signaling a clear shift away from the subdued growth seen earlier this year.

Services Drive Momentum, Manufacturing Stabilizes

Growth was led by a strong acceleration in the services sector, while manufacturing managed only a slight improvement. Demand strengthened notably, with new business rising at its fastest rate in two and a half years. Companies increased hiring as well, pushing employment growth to a 16-month high.

However, sentiment was not uniformly upbeat. Firms’ expectations for future output softened slightly, suggesting that while current activity is improving, confidence about the outlook remains measured.

Inflation Mixed: Costs Ease, Prices Rise

Input cost inflation eased for the second consecutive month, offering some relief to businesses. Yet output prices climbed at the fastest pace in seven months, indicating persistent price pressures, particularly within services. This combination points to an environment where demand is improving, but pricing dynamics are still adjusting.

Producer Prices Fall, Energy Costs Decline

Industrial producer prices in the Euro Area slipped another 0.1% month-on-month in September 2025, marking a second straight decline and surprising expectations for a flat reading. The fall was largely driven by a 0.2% drop in energy prices, following the 1.5% decrease in August.

Prices for intermediate and capital goods were unchanged, while durable consumer goods rose 0.3% and non-durable goods edged 0.1% higher. On a yearly basis, producer prices were down 0.2%, after a 0.6% decline in August, matching market forecasts.

A Rebound with Caution

The data illustrate an economy regaining momentum, driven primarily by strong services and recovering demand. Yet easing cost pressures alongside rising output prices suggests price dynamics remain in transition. The months ahead will show whether this expansion can maintain its pace without rekindling broader inflation pressures.

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