Business Essentials for Professionals

The Third Quarter Ended On A High Note For Euro Zone Businesses


The Third Quarter Ended On A High Note For Euro Zone Businesses
According to the results of a survey published on Friday, bolstered by manufacturers, who had their best month since early 2011, Euro zone private businesses ended the third quarter with much stronger growth than predicted.
Expectations that the European Central Bank will announce plans next month to reduce its monthly spending on quantitative easing is likely to increase by reports of that growth, alongside rising inflationary pressures.
Placed comfortably above the 50 level that separates growth from contraction, and bouncing to 56.7 from August's 55.7 was the IHS Markit's euro zone Flash Composite Purchasing Managers' Index for September which is seen as a good guide to economic growth.
The September's had been predicted to dip to 55.5 and therefore this reading was above all expectations.
"It was a super manufacturing performance. We are well- placed for a strong fourth quarter as well ... in this broad-based upswing," said Chris Williamson, chief business economist at IHS Markit.
Faster than the median forecast in a Reuters poll last week for 0.5 percent, the PMI pointed to third-quarter growth of 0.7 percent, Williamson said.
This year, the prices increased by business was one of the fastest and the upturn came despite that surge in prices. The output price index rose to 52.6 from 52.1.
Confounding expectations for a fall to 57.1 and chalking up its highest reading since February 2011, a PMI covering manufacturers soared to 58.2 from 57.4. An index measuring output rose to a 6 1/2-year high of 59.5 from 58.3.
Factories built up a surplus of orders at the steepest rate in the sub-index's 15-year history which suggested that the solid pace would be maintained next month. The backlogs of work index was 57.8, compared with August's 57.1.
"Firms are scrambling to expand capacity as fast as possible to meet order-book growth and rising backlogs is presenting them with huge problems," Williamson said.
With the PMI of services industry rising to reach 55.6, companies in the bloc's dominant service industry also had a much better month than expected. No change from August's 54.7 value was predicted by experts.
Their optimism has increased by activity thriving and new orders flooding in. The business expectations index jumped to 66.1 from 64.0.
Economic growth of 0.7 percent over the quarter was pointed out by the survey by Markit which said that the economy showed a “burst of activity” in September. That growth rate would be the fastest since the start of 2015. Markit said the currency appears so far to have had “only a modest impact on exports” even though some companies raised concerns about the strength of the euro.
The PMI for both France and Germany hit the highest in more than six years indicating improvements in both the countries according to separate reports.  Markit said Germany, the eurozone’s biggest economy, is in “rude health.”
On track for its best year since at least 2010 is the outlook for the 19-nation region by the latest positive readings.
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