Eurozone Service Sector Hits Seventeen-Month High

06 October 2003

September was the rosiest month since April 2002 for Eurozone service industries, reports the Reuters Eurozone Service Sector Business Activity Index.

The index leapt from 52.0 in August to 53.6 in September, confirming a turnround trend that started in June – since when the Index has registered growth for three successive months.

Key indicators from the September data are …

All of the big-four Eurozone national economies reported growth of activity. Moreover, in each country the rate of growth improved on August. The strongest increase was seen in France, where growth hit a fourteen-month high, followed by Spain and then Italy. Germany, although still displaying the weakest growth among the top quartet, recorded the biggest turnaround in recent months and its strongest growth since January 2002.

Business confidence
The Business Expectations Index, which measures optimism regarding business activity over the next twelve months, rose for the fourth successive month, up from 65.9 in August to 69.8 (the largest points rise since January 2001). The latest index reading signalled the highest level of confidence since May of last year.

New Business
The Incoming New Business Index rose from 51.8 in August to 53.6 in September, registering the second month of growth following seven months of continual decline. The rate of growth in September was the strongest since February 2001. All of the big-four national economies reported an increase in the pace of growth in September, although marked national variations in the rates of increase were reported.

Employment in the Eurozone service sector fell for the fourteenth consecutive month in September. The rate of job losses eased for the second straight month, but nevertheless remained significant by historical standards of the survey. A return to (modest) growth of employment in Italy and France, combined with a second successive monthly rise in employment in Spain, was insufficient to offset a further steep decline in German staffing levels.

Input Prices
Growth of average input prices slowed slightly in September. Although up on the survey record low seen in June, growth remained weak in comparison with the average seen over the survey history. Some oil-related increases in fuel prices were noted, helping to drive up overall growth of costs in Italy and Spain, but cost inflation eased in both Germany and France, in part due to slower growth of wages and salaries.

Eurozone Service Sector Indices are based on data from panels in Germany, Italy, France, Spain and Ireland, representing some 2,000 companies in total. Combined, these nations account for an estimated 83% of Eurozone private sector services output.

Data sourced from: NTC Research; additional content by WARC staff