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The HCOB Eurozone Construction PMI fell to 46.0 in September from 46.7, marking continued contraction across the region.

France led the decline with a sharp drop to 42.9 (from 46.7), while Germany remained weak at 46.2 and Italy held relatively firm at 49.8, edging closer to the neutral 50 mark.

The data underscores ongoing stress in the sector amid high financing costs and sluggish demand.

Market impact: Slightly negative for the EUR and European equities; persistent weakness in construction adds to signs of subdued growth heading into Q4.

European markets traded more softly on Monday, with the STOXX 600 and EURO STOXX 50 edging lower by midday as investors reacted to renewed political uncertainty in France.

The CAC 40 underperformed after Prime Minister Lecornu resigned, adding pressure to French assets and weighing on broader Eurozone sentiment.

Market impact: Negative for EUR and French equities; rising political risk dampens confidence, while safe-haven flows into bonds may increase near-term volatility.

Spain’s Industrial Production rose 3.4% YoY in August, up from 2.7% in July, marking the strongest annual gain in several months.

The increase reflects resilience in manufacturing despite broader Eurozone weakness, supported by robust demand in consumer goods and energy-related sectors.

Market impact: Positive for the EUR and Spanish equities; stronger output may bolster confidence in Spain’s Q3 growth outlook.

Switzerland’s seasonally adjusted unemployment rate edged up to 3.0% in September from 2.9% previously, while the non-seasonally adjusted rate held steady at 2.8%.

The small uptick points to mild labor-market cooling amid slower economic momentum, though employment conditions remain historically strong.

Market impact: Slightly negative for the CHF, as softer labor data could reinforce expectations that the SNB will maintain a cautious policy stance.

The euro area’s factory-gate prices slipped further in August. PPI fell 0.3% MoM (expected -0.1%, prior +0.3%), while the annual rate declined 0.6% (expected -0.4%, prior +0.2%).

Market impact: Negative for EUR, as persistent producer price weakness signals limited pricing power in industry, reinforcing disinflationary pressures.

Historical context: This is the second consecutive month of annual PPI decline, underscoring the cooling demand environment across the eurozone’s manufacturing base.

Italy’s government deficit dropped to 2.0% of GDP in Q2, a sharp improvement from 8.1% in the same period a year earlier. The reduction reflects stronger revenues and tighter fiscal control, easing pressure on Rome’s public finances.

Market impact: Positive for EUR and Italian bonds, as the data signals improved fiscal discipline and reduced near-term borrowing needs.

Historical context: This marks one of the lowest quarterly deficits in years, offering relief to markets wary of Italy’s debt sustainability challenges.

The euro area’s economy maintained modest growth momentum last month. The HCOB Composite PMI stood at 51.2, in line with expectations and slightly above August’s 51.0. Meanwhile, the Services PMI edged up to 51.3, just below forecasts of 51.4 but stronger than the prior 50.5, keeping the bloc in expansionary territory.

Market impact: Neutral to slightly positive for EUR, as steady services activity offsets manufacturing weakness.

Historical context: This marks the third consecutive month with both indices above 50, signaling stabilization after the contractionary spell in late 2023 and early 2024.

Germany’s economy showed signs of cooling in September. The HCOB Composite PMI came in at 52.0, slightly below forecasts of 52.4, though still higher than August’s 50.5 and above the 50 threshold, signaling modest growth.

The Services PMI eased to 51.5, down from 52.5 and short of expectations, but remained in expansionary territory, reflecting softer demand momentum.

Market impact: Neutral for EUR, as Germany stays in growth mode, though services appear to be losing steam.

Historical context: This marks the second consecutive month the composite index is above 50, following nearly half a year of contraction, signaling tentative stabilization.

Italy’s retail activity softened in August. Retail sales fell 0.1% MoM, missing expectations for flat growth, while annual sales rose just 0.5%, a sharp slowdown from 1.8% previously.

Market impact: Slightly negative for EUR, as weaker consumption highlights fragile domestic demand.

Historical context: This is the softest annual pace since early 2024, underlining the strain of high borrowing costs and inflation on household spending.

France’s economy delivered weak signals across both industry and services. Industrial production dropped 0.7% in August, missing forecasts of a 0.3% rise, following a 0.1% decline in July.

Survey data also painted a gloomy picture. The HCOB Composite PMI fell to 48.1 in September (expected 48.4, prior 49.8), while the Services PMI slipped to 48.5 (expected 48.9, prior 49.8). Both remain below the 50-threshold, signaling contraction in business activity.

Market impact: Negative for EUR, as the combination of weaker industry and subdued services underscores fragile growth momentum.

Historical context: France’s PMIs have been stuck below 50 for much of 2024, and the renewed industrial slump raises further concerns about the country’s role as a growth driver within the eurozone.

Italy’s services sector picked up pace last month, with the HCOB Services PMI climbing to 52.5, well above forecasts of 51.5 and the prior reading of 51.5. The improvement helped keep the Composite PMI steady at 51.7, signaling continued though moderate expansion across the private sector.

Market impact: Positive for EUR, as resilience in services offsets ongoing weakness in manufacturing.

Historical context: Services have driven Italy’s growth momentum in 2024–2025, keeping the composite index above 50 for five straight months despite subdued industrial activity.

Spain’s services sector gained momentum in September, with the HCOB Services PMI rising to 54.3, above expectations of 53.3 and August’s 53.2. The reading marks the fastest pace of expansion in a year, driven by resilient demand and stronger new business inflows.

Market impact: Positive for EUR, as robust services activity offsets weakness in manufacturing and supports Spain’s near-term growth outlook.

Historical context: Services have remained in expansion territory since late 2023, and September’s acceleration suggests the sector is underpinning Spain’s broader economic resilience.