Eurozone business activity grew more slowly in October, while renewed French contraction and higher bond-market risk highlighted pressure points for a region whose shared currency traded near $1.12 Friday. Reuters reported the euro was down 0.12% at $1.12 on Oct. 23 and heading for a 0.35% weekly decline.
S&P Global’s Flash Eurozone PMI Output Index registered 51.9 in October, down from 53.1 a month earlier. Readings above 50 signal expansion, so the index showed growth for a fourth straight month, though at a slower pace. The flash estimate drew on about 85% of the responses typically received. S&P Global said the result was consistent with quarterly GDP growth of 0.3%, compared with 0.4% in September; this is a survey-based estimate, not an official GDP release. EconoTimes previously compared U.S. and eurozone PMI readings from Friday’s data.
France’s business activity contracted again, S&P Global said, while confidence fell to its lowest level since 2012 outside the pandemic period. The research firm listed strikes, protests and wider political instability as possible factors. It also reported that input-price pressures remained elevated as growth slowed, a combination that could complicate European Central Bank policy decisions.
Reuters said a selloff in French government bonds lifted the country’s debt risk premium to its highest level since the 2011 eurozone sovereign-debt crisis. Citi economist Giada Giani, quoted by Reuters, said France “remains a drag” while the rest of the euro area remains resilient.
The dollar index rose 0.13% to 101.70 Friday but was on track for a 0.10% weekly decline, Reuters reported. Reuters also reported, citing LSEG data, that futures traders priced an 81% chance of a Federal Reserve rate increase in December, a market-implied probability rather than a Fed commitment.
The European Central Bank raised its deposit facility rate by 25 basis points to 2.50%, effective Sept. 16, and said future decisions would depend on incoming data. The Federal Reserve’s calendar lists the next Federal Open Market Committee meeting for Oct. 27-28; the ECB schedule lists its next policy decision for Oct. 29.
