(Bloomberg) -- The euro-area economy picked up in September as services performed better than estimated and new orders rose at the fastest pace in more than six years.
A Purchasing Managers Index by IHS Markit, measuring activity in the private sector, climbed to 56.7 last month. That's the strongest in four months and matched an initial reading on Sept. 22. A gauge of services increased to 55.8, beating the flash number of 55.6.
The report comes weeks before the European Central Bank's Governing Council meets to decide whether it can afford to pare back stimulus in 2018 as the 19-nation economy improves. While policy makers' chief concern is muted inflation, the PMI readings suggest that the outlook is starting to change.
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“A rise in price pressures reflects the development of a sellers' market for many goods and services as demand outstrips supply,” said Chris Williamson, chief business economist at IHS Markit. “Deflationary forces have abated, fueling confidence that reflationary pressures are becoming more engrained.”
Markit also said that the region looks increasingly able to withstand any political shocks. That may be a comfort as German Chancellor Angela Merkel works out how to deal with a rise in support for far-right opposition, and Spain faces street protests in a standoff over Catalonia's illegal vote for independence.
Euro-area output in September was led by Germany, which also saw unemployment slide to a record low, and Ireland. Economic activity in France rose at the sharpest rate in more than six years, and Spain saw its expansion improve from August's seven- month low. Italian growth was the weakest since March.
--With assistance from Mark Evans
To contact the reporter on this story: Paul Gordon in Frankfurt at pgordon6@bloomberg.net.
To contact the editor responsible for this story: Fergal O'Brien at fobrien@bloomberg.net.
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