Eurozone business activity surged in September 2025, reaching its highest level in 16 months—even as warning signs emerge over its durability and regional disparities. The composite flash PMI reading rose to 51.2, up from 51.0 in August, marking nearly a year of consecutive expansion, yet new business orders showed zero growth after August’s brief rebound.
Germany led the charge, with its PMI climbing to 52.4, reflecting robust contributions from its services sector. In contrast, France remained mired in contraction, with activity slipping to 48.4, weighed down by political instability and weak demand. Across the euro area, services continued to outperform manufacturing, which dropped into contraction at a 49.5 reading.
Labor markets showed no fresh momentum—employment levels plateaued after months of growth. Meanwhile, inflationary pressures cooled: input cost increases and output price rises eased, suggesting that price challenges may be softening. The European Central Bank has held rates steady in light of mixed signals, and most forecasts suggest interest rate cuts are not on the immediate horizon.
For policy makers and investors, the growing divergence between Germany and France could be a turning point. While Germany’s expansion may help sustain eurozone momentum, France’s persistent contraction could drag on collective growth. Observers will be watching closely whether new orders pick up, and whether inflation and employment trends support continued expansion into the next quarters.
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