Euro zone business growth slows as rising costs and France weakness pressure outlook

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Oleksii Zaichenko

23.10.2026

Euro zone business growth slows as rising costs and France weakness pressure outlook — Euro zone growth slows

Euro zone private sector activity loses momentum in October, with the bloc's composite PMI falling to a four-month low as higher energy-related costs weigh on companies. The slowdown coincides with renewed contraction in France, softer demand and fading business confidence across the currency area.

Highlights

Flash Eurozone Composite PMI Output Index fell to 51.9 in October from 53.1 in September, missing the 52.7 Reuters forecast.
Input costs surged for a second month, driven by higher energy, fuel, and transport expenses, pressuring company margins despite slower selling price increases.
New export orders rose for a third consecutive month, outpacing overall new business growth after nearly 4.5 years of monthly declines.

October PMI points to slower expansion

As reported by Reuters, citing S&P Global, the Flash Eurozone Composite PMI Output Index falls to 51.9 in October from 53.1 in September, marking its lowest reading since June and coming in below the 52.7 forecast in a Reuters poll. A reading above 50.0 indicates growth, but the latest figure signals that expansion in the private sector is losing pace.

Chris Williamson, chief business economist at S&P Global Market Intelligence, says the slowdown is tied to a further escalation in inflationary pressures during the month. He says input costs are rising sharply again, particularly in manufacturing, as higher energy prices push firms to lift selling prices to protect margins.

Input costs accelerate for a second straight month, linked to higher energy, fuel and transport expenses, partly due to the Middle East war. Even so, companies increase their selling prices more slowly than in September, indicating some pressure on margins.

New orders, a key measure of demand, grow at their slowest pace in the current four-month expansion period, with both manufacturing and services recording only modest gains. New export orders rise for a third consecutive month after nearly four and a half years of uninterrupted monthly declines, and their growth outpaces that of overall new business.

In our previous article, we covered Mario Draghi’s warning that keeping interest rates above growth for too long can worsen public debt dynamics and intensify pressure for policy choices that ultimately fuel inflation. He argued that central banks should focus on bringing inflation under control while keeping rates no higher than necessary to avoid choking off productive investment, and he highlighted EU-level measures such as deeper market integration and targeted industrial policy to support long-term growth.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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