The HCOB flash euro-area composite PMI fell to 51.9 in October from 53.1 in September, its lowest reading since June. The figure, released at 08:00 GMT today, came in below a consensus of 52.7 and below every forecast in a Reuters poll of economists, whose median was also 52.7. No revision to September’s figures was flagged. Any reading above 50 still signals expansion.
EUR/USD traded at 1.1196 at 11:51 GMT, down 25.5 pips, or 0.23 per cent, from the previous session’s close of 1.1221. The pair opened the day at 1.1222 and has ranged between 1.1230 and 1.1189. It was already lower before the release on worries over French debt, and it briefly traded below 1.1200 at 07:14 GMT, almost an hour before the data. The PMI added to a decline that had started, so the move cannot be credited to the survey alone.
The services PMI fell to 51.7 against a consensus of 52.5 and September’s 53.0. The manufacturing PMI came in at 52.4 against a consensus of 52.7 and September’s 52.9.
French private-sector activity unexpectedly contracted, which the survey linked to political uncertainty and economic pressures, while German growth softened. New orders grew at their slowest rate of the four-month expansion, although new export orders rose for a third consecutive month. Employment barely rose: services hiring slowed to a five-month low and manufacturing payrolls edged down. Business confidence fell to a five-month low, and French confidence was the weakest since 2012 outside the pandemic.
Costs moved the other way. Input costs accelerated for a second month on higher energy, fuel and transport costs, partly because of the Middle East war, and manufacturing input price inflation was the steepest since May. Selling-price increases slowed. Rory Fennessy, an economist at Oxford Economics, said the flash PMIs poured cold water on how much further sentiment could improve after a spring and summer in which the euro zone economy defied expectations. On costs, Capital Economics’ Harry Chambers said:
While manufacturers are continuing to feel the squeeze of higher energy prices, there is still little evidence of second-round effects, which will be reassuring for the ECB,
Harry Chambers, Capital Economics
The release therefore carries a slowing economy and firmer cost pressure at the same time. A Reuters poll of economists earlier this month expected the European Central Bank to hold its deposit rate at 2.50 per cent at its meeting on 29 October 2026 and to raise it by 25 basis points in December.
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