Private-sector economic activity in the Eurozone is showing renewed momentum, signaling growth near its highest level in 17 months, according to the latest purchasing managers’ index (PMI) data.
The rebound was largely driven by Germany’s manufacturing recovery and stronger demand in Southern Europe, where service sectors benefited from resilient domestic spending and improving export orders. Analysts say this trend suggests the euro area may be gradually emerging from a period of stagnation, helped by easing inflation and expectations of rate cuts from the European Central Bank (ECB) in early 2026.
However, France remains in contraction, weighed down by weak industrial output and falling new orders in both manufacturing and services. Economists warn that this divergence highlights structural challenges within the bloc — particularly between northern export-driven economies and southern nations that rely more on services and tourism.
Despite uneven growth, investor confidence across Europe has improved, with bond spreads narrowing and equity markets rallying on hopes that the ECB’s tightening cycle is near its end.
