Eurozone September PMI Hits Nearly Three-and-a-Half-Year High, Economy Strengthens, ECB Rate Hike Expectations Rise

[Eurozone September PMI Hits Nearly Three-and-a-Half-Year High, Economy Strengthens, ECB Rate Hike Expectations Rise]

(1) Economists at ING noted in their analysis that the September Eurozone Purchasing Managers' Index showed economic activity remained resilient despite significantly higher oil prices, falling water levels, and supply chain disruptions.

(2) This performance has increased the likelihood of another European Central Bank rate hike, notably heating up policy expectations.

(3) Data showed that the Eurozone Composite PMI rose to 53.1 in September from 52.0 in August, reaching its highest level in nearly three and a half years, reflecting simultaneous improvements in both the services and manufacturing sectors.

(4) The economist stated that today's PMI data makes it harder for even the most dovish policymakers to rule out another rate hike, with notably hawkish language.

(5) The economist expects the Eurozone economy to achieve fairly solid growth in the third quarter, with sufficient short-term momentum.

(6) Meanwhile, the survey results also showed renewed upward pressure on inflation, with increases in input costs and output prices both at their fastest pace in nearly four months, highlighting pass-through pressure on the cost side.

(7) Overall, resilient economic data combined with resurgent price pressures may lead the European Central Bank to weigh tightening options more heavily in upcoming decisions, with markets closely watching its guidance on future policy paths.