{"id":440728,"date":"2026-10-23T17:40:20","date_gmt":"2026-10-23T10:40:20","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/macro-pulse-europes-economy-is-losing-steam-but-inflation-wont-let-up-440728\/"},"modified":"2026-10-23T17:40:20","modified_gmt":"2026-10-23T10:40:20","slug":"macro-pulse-europes-economy-is-losing-steam-but-inflation-wont-let-up","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/macro-pulse-europes-economy-is-losing-steam-but-inflation-wont-let-up-440728\/","title":{"rendered":"Macro pulse: Europe’s economy is losing steam but inflation won’t let up"},"content":{"rendered":"
\n

The latest October PMI readings<\/a> today don’t paint a particularly encouraging picture of the health of the euro area economy. Growth is slowing and businesses are feeling the pinch, but inflation pressures are still refusing to go away. And that is the sort of headache that the ECB really doesn’t need right now.<\/p>\n

The data showed disappointing readings from both the manufacturing and services sectors,\u00a0with the latter slowing rather markedly. A lot of that can be attributed to France though,\u00a0as business activity there returned to contraction in October. And while Germany continues to hold up better, the broader slowdown across the region is becoming more difficult to ignore as we look to the final quarter this year.<\/p>\n

With that in mind, this is where things get uncomfortable for the ECB.\u00a0While business activity are showing signs of slowing down, price pressures haven’t quite followed suit.<\/p>\n

\n

In looking at the chart above, businesses are still grappling with elevated cost pressures. The report noted that manufacturers saw a sharp acceleration in input prices in October, largely driven by higher energy costs, with the latest increase being the steepest since May.<\/p>\n

The only consolation to this is that\u00a0output price inflation did at least ease a little on the month. However, that could also be hinting that\u00a0businesses may be finding it harder to pass rising costs on to consumers.<\/p>\n

So, that is all leaving the ECB with quite the dilemma.<\/p>\n

Traders are pricing in roughly 90% odds\u00a0that the ECB will leave rates unchanged at next week’s meeting. But looking to December,\u00a0traders are still assigning around 68% odds of a rate hike in the final month of the year.<\/p>\n

As things stand, inflation pressures remain the most pressing concern for policymakers. But then, the data today also serves up a reminder that\u00a0the euro area economy isn’t exactly in the best of shape to withstand further tightening. In particular, France is the big name that is struggling the most amid fiscal worries and concerns surrounding public finances. And the risk of spillover effects to the rest of the region should not be discounted.<\/p>\n

Taking that into consideration, the big question isn’t so much\u00a0whether the ECB will hold next week. That’s pretty much a done deal. Instead, it is whether\u00a0policymakers can afford to keep raising rates if growth continues to lose momentum while higher energy costs squeeze businesses and households alongside growing fiscal worries across the region.<\/p>\n

\n

This article was written by Justin Low at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

The latest October PMI readings today don’t paint a particularly encouraging picture of the health of the euro area economy. Growth is slowing and businesses are feeling the pinch, but inflation pressures…<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-440728","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=440728"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/440728\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=440728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=440728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=440728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}