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Eurozone Private Sector Growth At 4-Month High

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Eurozone's private sector expanded at the fastest pace in four months in September signaling that the economy ended the third quarter on a strong note.

The headline composite output index rose unexpectedly to 56.7 in September from 55.7 in August, flash data from IHS Markit showed Friday. The expected score was 55.6.

Growth accelerated in both manufacturing and services, albeit with the former continuing to lead the expansion. The service sector activity showed the biggest growth since May, while the expansion in manufacturing output was the greatest since April 2011.

The services Purchasing Managers' Index increased to 55.6 from 54.7 in August. The score was forecast to rise slightly to 54.8.

At the same time, the factory PMI climbed to 58.2 from 57.4 a month ago, while it was forecast to fall to 57.2.

"The survey data point to 0.7 percent GDP growth for the third quarter, with accelerating momentum boding well for a buoyant end to the year," Chris Williamson, chief business economist at IHS Markit, said.

"The rise in business activity and accompanying build-up of price pressures will fuel expectations that the ECB is poised to announce its intention to rein back some of its stimulus, reducing its asset purchases in 2018," Williamson said.

While PMI data will embolden policymakers, as inflation is set to rise only gradually markets are overestimating how soon the European Central Bank will raise interest rates, Stephen Brown, an economist at Capital Economics, said.

Data showed that rates of expansion in France and Germany accelerated to the highest seen for over six years in September.

Germany's composite output index rose unexpectedly for the consecutive second month in September, to 57.8, from 55.8 in August. This was the highest reading since April 2011. The consensus score was 55.7.

The manufacturing PMI climbed to 60.6 in September from 59.3 in August. The expected reading was 59. The sector logged the sharpest monthly improvement in business conditions since April 2011.

Similarly, the services PMI improved to a 6-month high of 55.6 from 53.5 in August. The score was above the expected level of 53.7.

France's composite PMI rose unexpectedly to a 76-month high of 57.2 in September. Economists had forecast the index to drop to 55.0 from 55.2 in August.

Manufacturing production rose to the greatest extent since April 2011. The factory PMI climbed to 56.0 from 55.8 in the previous month. The reading was forecast to drop to 55.5.

The rate of growth in service sector activity accelerated in September and was only marginally weaker than May's near-six-year peak. The corresponding PMI improved to 57.1 from 54.9 a month ago. The expected level was 54.8.

by RTT Staff Writer

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