Euro zone growth slows to four-month low in October as demand nearly stalls, PMI shows
The euro zone’s economic expansion slowed sharply in October, with the S&P Global composite PMI falling to 51.7 from 53.1 in September, as new orders barely grew, costs squeezed businesses and confidence hit its weakest level in five months.
The euro zone’s economic expansion slowed sharply in October but remained resilient, according to a closely watched business survey published on Wednesday, as demand came close to stalling, rising costs squeezed companies and business confidence fell to its weakest level in five months.
The S&P Global Eurozone Composite Purchasing Managers’ Index fell to 51.7 in October from 53.1 in September, a four-month low and below the preliminary estimate of 51.9. Readings above 50.0 indicate growth in activity, so the survey still points to expansion — just at a notably slower pace than in the previous month.
The slowdown was broad. The euro zone services PMI, which feeds into the composite index, fell to 51.4 from 53.0 in September, also a four-month low. New orders grew only marginally, a steep drop from three months of stronger growth, with demand for services edging lower, Reuters reported from the survey.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said the October data indicated that the euro zone economy was growing at a “respectable though unexciting” rate of about 0.3 per cent at the start of the fourth quarter, building on a more robust performance through the third quarter.
Business confidence weakened for a third straight month and remained below its long-run average, a sign that firms are becoming more cautious about the outlook even though activity has not yet contracted. France was the weakest performer among the major economies covered, slipping back into contraction after a brief recovery in September.
The survey lands against a difficult backdrop for European policymakers. The European Central Bank left interest rates on hold last week, as expected, and economists have been watching whether cooling demand and softer confidence would eventually push the bank towards easing, or whether persistent cost pressures would keep it on hold for longer.
For businesses, the combination of near-stalled demand and rising costs is the most uncomfortable part of the picture. When orders barely grow but input costs keep rising, margins are squeezed, and firms face a choice between absorbing the pressure, raising prices and risking further lost sales, or cutting back on hiring and investment.
For households, the survey does not by itself signal a downturn, but it does suggest the fourth quarter began with less momentum than the third. A growth rate of around 0.3 per cent is enough to keep the economy expanding, yet it leaves little buffer if external shocks — from trade tensions to energy prices — intensify.
Markets will now look to the next round of hard data, including industrial production and retail sales, to see whether the softer survey readings are confirmed, and to the ECB’s own language for any hint that the cooling in demand is changing its assessment of the balance of risks.
Figures in this post, including the composite PMI of 51.7, the services PMI of 51.4 and the estimated 0.3 per cent growth rate, were checked at 2026-11-04T16:21:08+05:00 against the S&P Global survey as reported by Reuters.
This post is market news information only, not financial advice.
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