The eurozone economy expanded in October, with the Composite PMI rising to 52.5, its highest in twenty-nine months, supported by stronger service activity (53.0), its highest in seventeen months. New business grew, reaching a seventeen-month high, well above its long-term average. This was despite the reduction in foreign demand, highlighting reliance on domestic demand.

Geographically, Spain (56.0) led the bloc with robust activity, followed by Germany (53.9), Ireland (53.7), and Italy (53.1), which all expanded. Meanwhile, France (47.7) slipped deeper into contraction. This divergence reflects uneven recovery across Europe. Employment grew with job growth rising the fastest since June 2024.

Inflationary pressures increased, with input costs rising in line with the long-run average and output prices rising the fastest since March.

In summary, the eurozone is managing to maintain its recovery as demand rises, growth ticks upward, and optimism remains firm. This latest update takes the RPI to 42 and RPI-P to 40, meaning that economic activities continue to outpace the expectations of the euro zone economy.

Forecasters expect the composite final unchanged at 52.2 and services final unrevised at 52.6.

The Composite Purchasing Managers' Index (PMI) provides an estimate of private sector output for the preceding month by combining information obtained from surveys of the manufacturing and service sectors of the economy. Results are synthesised into a single index which can range between zero and 100. A reading above (below) 50 signals rising (falling) output versus the previous month and the closer to 100 (zero) the faster is output growing (contracting). The report also contains the final estimate of the services PMI. The data are provided by S&P Global using 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.