Euro-Zone Composite PMI Hits Three-Year High of 53.1 as Services Surprise, Bolstering ECB Rate-Hike Case

Euro-area private-sector activity expanded at its fastest pace in over three years in September, with the S&P Global Composite Purchasing Managers' Index rising to 53.1 from 52 in August, beating analyst expectations of a decline to 51.7. Germany grew at its quickest pace since October 2025 and France unexpectedly expanded at the fastest rate in more than two years. S&P Global attributed the gains to rising AI and defense spending. The data reinforce expectations the European Central Bank will raise interest rates again, possibly as early as October, after two hikes since the outbreak of the Iran war. Inflation stands at its highest in nearly three years, and the OECD raised its 2026 euro-area growth forecast by 0.2 percentage points to 1%, while cutting France to 0.4%. S&P Global warned that persistent economic strength is driving consumer prices higher, likely emboldening the ECB to tighten again before year-end.