Eurozone PMIs are a 'clear disappointment' as activity hits its lowest level since June

Matthew Ryan, CFA Ebury

This morning’s flash eurozone PMIs for October were a clear disappointment, taking some of the shine off the bloc’s recent solid run. Activity slowed in both services and manufacturing, dragging the composite index to 51.9 from 53.1 in September. That is its lowest level since June and well short of the 52.7 consensus.

The index remains comfortably in expansion territory, but firms are clearly feeling the pinch from rising energy costs and expectations of higher ECB rates.

France was a predictable drag, with activity swinging back into contraction amid widespread social unrest and deep concern over the country’s fiscal outlook. The euro is languishing at its weakest levels against the dollar since May 2025, and today slid to 18-month lows against sterling.

The weakness in EUR/GBP perhaps no longer reflects political woes in Europe alone. It increasingly captures diverging economic fortunes: a slowing Euro Area against a resilient UK.

Today’s UK PMI figures were remarkably upbeat, with the composite index unexpectedly jumping to its highest level since February (53.1), a clear vote of confidence in Britain’s economy ahead of next week’s Autumn Budget.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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