Eurozone PMI rises to new high in almost a year and a half, with Germany leading and France lagging.

Thanks to the strong performance of the German economy offsetting France's weak trend, eurozone economic activity unexpectedly rose to its highest level since May 2024. The Composite Purchasing Managers' Index (PMI), compiled by S&P Global, rose from 51.2 in September to 52.2 in October, surpassing the critical 50 mark that separates economic expansion from contraction. Analysts had predicted the index to remain steady. This unexpected growth was driven by the services sector, especially in Germany, which saw its composite index reach its best performance in a single month since May 2023. However, neighboring France remained a drag: its PMI index has been declining for 14 consecutive months, influenced by the country's return to political turmoil. Cyrus de la Rubia, economist at Hamburg Commercial Bank, stated on Friday: "The German economy significantly improved in October, but the French economy has been contracting at an accelerated pace for two consecutive months. Therefore, the eurozone's economic growth, while slightly accelerating, remains far below the levels it could have reached." Despite the sluggish economic growth, the European Central Bank (ECB) has no intention of further lowering interest rates, having reduced them eight times in the past year. With inflation levels close to the 2% target, it is expected that lending costs will remain unchanged next week. David Powell, senior economist for the eurozone, said, "The eurozone's composite PMI survey further supports the European Central Bank's decision to maintain interest rates this month. The data shows that despite the increase in US tariffs, the eurozone economy remains resilient, and some inflation pressures continue." De la Rubia pointed out that the increase in service prices remains moderate. He said, "The sales price inflation rate has risen slightly, but remains close to the long-term average. The cost increase in October has slightly decreased, so the risks in this respect are low in the short term. The ECB is particularly concerned about inflation in the services sector, and this data may confirm its position of no further rate cuts." The PMI, being released at the beginning of each month and able to reflect economic trends and turning points well, is highly anticipated by the market. However, as a measure of the "breadth" of output changes rather than the "depth," these business surveys can sometimes be difficult to directly correlate with quarterly GDP data. Data released later on Friday showed that the UK's composite PMI index rose to 51.1, surpassing expectations; the US composite PMI index is expected to fall to 53.5.