Growth in the service sector saved the eurozone from recession in October

Economic activity in the eurozone showed unexpected resilience in October, avoiding a second recession in a row. The growth of the service sector has become a key factor, allowing the S&P Global business activity index to reach 50 points.

Earlier forecasts were less optimistic, but the revised data indicate a stronger economic development compared to initial estimates.

Experts attribute this stability to a gradual decrease in inflation and wage growth, which stimulates consumption in the service sector.

Despite the positive dynamics in the European labor market, the shortage of workers puts pressure on wages and may become an obstacle for the European Central Bank to achieve inflation of 2%. 

Investors, taking into account these circumstances, adjusted their expectations about the ECB's interest rate cut in December. At the same time, they are still waiting for continued monetary easing next year.