Eurozone Service Sector Hits Three-Year Growth High

06 November 2003

Service-sector activity across the twelve nations that use the euro grew at its fastest rate for nearly three years last month.

The Reuters Eurozone Service Sector Business Activity Index – compiled by NTC Research – jumped from September's 53.6 to 56.0 in October, above the 50.0 threshold separating expansion from contraction.

This was the fourth consecutive month of growth and the fastest pace since December 2000. Service-sector business climbed in all surveyed eurozone nations, with the fastest growth in France.

Combining these figures with the manufacturing sector report earlier this week [WAMN: 04-Oct-03], the composite index of total Eurozone output jumped from 52.8 to 54.9 – the highest level since January 2001.

Of the service index's component indicators:

Business expectations
The gauge of optimism in levels of business activity for the coming year slipped slightly from September's sixteen-month high, but stayed above the long-term average.

New business
The Incoming New Business Index climbed from 53.6 to 55.5, the third successive reading above 50.0.

Backlogs of work
The Outstanding Business Index rose to 49.9, signalling no significant change in backlogs of work compared with September.

The Eurozone services workforce contracted for the fifteenth consecutive month in October, though the rate of decline slowed as the Employment Index rose from 47.7 to 48.5.

Input prices
Average input prices rose at the fastest rate for six months in October, the relevant index rising from 53.9 to 54.6.

Prices charged
Average prices charged continued to fall in October. With costs rising and pricing power remaining weak, this suggests downwards pressure on margins.

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