Euro Zone Services Growth Hits Fastest Pace Since November Last Year

Euro zone services activity accelerated to its fastest pace since November last year, as September’s overall growth reached a five-year high and added to pressure for more aggressive European Central Bank policy tightening.

A composite signal from purchasing managers’ index surveys indicated the bloc’s economy was expanding at a quarterly rate of 0.4%, with further growth expected in the fourth quarter. Momentum extended beyond manufacturing, with services activity showing signs of growth in Germany and France for the first time since March. Both countries recorded their first services expansion of the year.

Italy’s services sector expanded for a fourth consecutive month and performed better than Spain’s. Spain recorded its strongest growth in four months.

Input-price inflation rose to 4%. Euro zone inflation was approaching the European Central Bank’s 2% target limit, while the combination of faster economic growth and higher price pressures increased calls for more aggressive monetary tightening.