Eurozone business activity strengthened in October 2025, marking the region's fastest rise in new orders in two-and-a-half years and signalling steady momentum in the private sector. The Eurozone composite PMI climbed to 52.2, its highest in 17 months, reflecting broad-based expansion across services (52.6) and a marginal improvement in manufacturing (50.0). Growth was driven largely by the services sector, which benefited from stronger domestic demand, while manufacturing stabilised after previous contractions.

Encouragingly, employment rebounded, with job creation in services offsetting continued staff cuts in manufacturing. Backlogs of work also stabilised for the first time since April 2023, showing early signs of renewed capacity strain. Inflation dynamics were mixed: input cost inflation eased below the series average, yet output prices rose at the sharpest pace in seven months, suggesting firms are cautiously passing higher costs to consumers.

Despite these gains, business optimism weakened, particularly in Germany and France, amid geopolitical tensions, cost concerns, and fragile export demand. Still, companies across much of the Eurozone remain confident of future output growth. Overall, the data depict a resilient yet uneven recovery, with services fuelling growth while manufacturing and sentiment lag behind. These latest updates take the RPI to 25 and the RPI-P to 42, meaning that economic activities are now performing ahead of expectations in the zone.

The composite index is expected at 51.0 versus 51.2 in September final. Manufacturing is seen at 49.9 versus 49.8 and services at 51.3 versus 51.3.

The flash Composite Purchasing Managers' Index (PMI) provides an early estimate of current private sector business activity by combining information obtained from surveys of the manufacturing and service sectors of the economy. The flash data are released around ten days ahead of the final report and are typically based upon around 75-85 percent of the full survey sample. Results covering a range of variables including manufacturing output, employment, new orders, backlogs and prices are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) activity versus the previous month and the closer to 100 (zero) the faster is activity growing (contracting). The report also contains flash estimates of the manufacturing and services PMIs. The survey, produced by S&P Global uses a representative sample of around 5,000 manufacturing and services companies, the former including Germany, France, Italy, Spain, the Netherlands, Austria, the Republic of Ireland and Greece and the latter Germany, France, Italy, Spain and the Republic of Ireland.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the purchasing managers' manufacturing indexes, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.