Eurozone's Economic Upsurge Defies Expectations

The Eurozone's business activity surged unexpectedly in October, driven by new orders, as indicated by the HCOB Flash Eurozone Composite PMI rising to 52.2. This growth was primarily led by the services sector, although manufacturing showed marginal improvement. Despite the gains, business confidence dipped amidst inflation concerns.

In a surprising turn of events, Eurozone business activity grew at an accelerated rate in October, as companies received new orders at a pace not seen in over two years. The HCOB Flash Eurozone Composite PMI, compiled by S&P Global, climbed to 52.2, suggesting the region's economy is gaining momentum.

Services were at the forefront of this expansion, hitting a 14-month high with a PMI of 52.6, surpassing expectations, while manufacturing also saw slight growth. Employment trends varied, with service sectors hiring at their fastest since 2024, whereas manufacturing faced job cuts due to weak demand.

Overall operating costs saw a small dip, yet firms increased prices marginally. Inflation remained moderate, with the ECB unlikely to cut interest rates further given the current economic trajectory. Nonetheless, business confidence fell to a five-month low, hinting at underlying caution towards future growth.

(With inputs from agencies.)