German economy strengthens in boost to Euro region outlook

[LONDON] Germany's economy showed continued strength at the end of the third quarter, with a gauge of private-sector activity hitting the highest in more than six years.

The jump in the composite Purchasing Managers' Index in September coincided with a similar improvement in the measure for France. With the euro area's two biggest economies maintaining momentum, that's keeping the region on track for its best year since at least 2010.

Both national numbers beat economists' expectations, suggesting that the eurozone gauge, forecast to dip slightly, could also surprise on the upside. That report is due 9am London time.

For Germany, IHS Markit said the PMI rose to 57.8 from 55.8 in August, with both services and manufacturing strengthening.

As with France, the index is far above the key 50 level that divides expansion from contraction.

Phil Smith, an economist at Markit, said the German report shows the economy is in "rude health, highlighting strong broad-based growth in both business activity and employment".

The numbers come days after Bloomberg's latest euro-area economic survey, which saw the currency region get another upgrade.

Gross domestic product is now forecast to rise 2.1 per cent this year, up 0.1 percentage point compared with August.

The European Central Bank also raised its forecasts this month as its policy makers began a debate on how to slow the monthly asset purchases they've used to help support the economy in recent years.

BLOOMBERG