Eurozone Growth Stalls as French Business Activity Contracts in October

OPA WIRE, Oct 23 (OPA) — France’s brief return to economic growth ended in October, with its composite purchasing managers' index (PMI) dropping to 48.4 from 51.1 in September. The decline, which fell well below economist forecasts of 50.5, reflects a broader cooling across the eurozone. While the regional composite PMI remains above the 50-point threshold separating growth from contraction, the reading of 51.9 represents the weakest performance in four months.

Joe Hayes, senior principal economist at S&P Global Market Intelligence, attributed the French downturn to mounting fiscal concerns and anxiety regarding the 2027 presidential election. French businesses reported a sharp decline in new orders and a six-month streak of staff reductions. Meanwhile, government borrowing costs have surged, with the 10-year bond yield reaching 5.14% on Thursday—the highest level since 2002—before settling at 5.04% on Friday.

Germany, the eurozone's largest economy, maintained a more resilient stance despite a slowdown in its composite PMI to 52.8. German manufacturing benefited from defense and infrastructure spending, though firms face escalating input costs for energy and raw materials. Phil Smith, economics associate director at S&P Global, noted that rising costs for oil and electronic components are dampening expectations, as Brent crude trades near $114 per barrel.

European Central Bank policymakers face a difficult path as they balance cooling growth against persistent inflation. Chris Williamson, chief business economist at S&P Global, warned that higher interest rates are beginning to suppress demand. With the euro trading near $1.12 and French stocks under pressure, the survey data suggests that while a recession is not yet confirmed, the recovery remains fragile as the ECB weighs further policy tightening.