Private sector business activity in the euro zone picked up further in September as the services sector returned to positive territory, a closely-watched survey shows today.
But analysts warned that an acceleration in unemployment would tighten the brakes on already 'waning' momentum, with consumer spending likely to be held back in the run-up to the crucial Christmas retail period.
Overall economic activity improved after emerging from negative territory in August but manufacturing business slowed, according to the survey of some 14,000 companies, designed to provide a snapshot of the economy's health.
The flash estimate purchasing managers' index (PMI) for the euro zone, compiled by data and research group Markit, rose to 50.8 points from 50.4 in August.
The services index rose from 49.9 points to 50.6, topping the key 50-point boom-or-bust line to indicate a return to growth in this segment for the first time in 16 months.
Markit said the results 'round off the strongest quarter since the second quarter of last year, suggesting that the euro zone economy stabilised in the third quarter'.
'Robust manufacturing inventory ratios and service sector confidence suggest we could see an even better performance in the fourth quarter,' it added.
But having slowed over the previous four months, the rate of job losses increased in September - a 15th month of rising unemployment in a row - with input costs and selling prices falling only slightly slower than before.
In other data for the euro zone released today, the European Union's Eurostat agency said new industrial orders in July rose by 2.6%, a slowing after June's gain of 4%.
