September’s flash PMI releases for the Eurozone, UK and US show uneven growth across advanced economies. Services have largely propped up activity, while manufacturing shows renewed fragility. Price pressures are easing in some areas, but policy uncertainty and tariffs continue to cloud the horizon. For corporate treasurers, the data underscore both the opportunities and the risks in managing liquidity, funding and currency exposure as 2025 heads into its final quarter.

Modest Eurozone expansion masks divergent fortunes

The Eurozone’s composite PMI rose fractionally to 51.2 in September, up from 51.0 in August and marking a 16-month high. It was the ninth consecutive month above the 50.0 threshold, signalling ongoing private-sector expansion. The acceleration was driven by services, where the PMI hit 51.4, its strongest level in nine months. Manufacturing output, however, slowed sharply to 50.7, down from 52.5 in August.

Germany provided the main engine of growth, with output increasing at one of the fastest rates since mid-2023. In stark contrast, France remained in contraction for a thirteenth straight month, posting its steepest decline since April. Activity in the rest of the bloc grew more slowly.

New orders stalled after August’s brief return to growth. Services saw a marginal uptick, offset by the steepest fall in manufacturing new business since February. Weak foreign demand continued to weigh on overall orders, with export volumes declining for the 30th consecutive month and at the fastest rate in half a year.

Employment was broadly unchanged, ending six months of job creation. Services added staff at the slowest pace in seven months, while manufacturers extended their job-cutting streak dating back to mid-2023. German firms posted the sharpest reduction in headcount this year, while France managed a modest increase.

Inflationary pressures eased. Input costs rose at a slower pace, with manufacturers recording outright declines for the first time in three months. Output prices climbed modestly, the weakest since May, with notable divergence: Germany saw faster price growth, while France registered outright declines.

Confidence fell to a four-month low, led by weaker sentiment in manufacturing. Firms outside Germany and France remained more upbeat, but overall optimism slipped below the series average.

For treasurers, the Eurozone picture is a complex one. Diverging country performance raises questions around supply chain dependencies and regional sales exposure. Stagnant order growth suggests cash flow visibility may remain uncertain, particularly for manufacturers exposed to export markets. On the positive side, weaker price pressures could ease procurement costs and support margin stability.

UK growth slows sharply as demand falters

The UK’s composite PMI dropped to 51.0 in September from 53.5 in August, marking a four-month low. Services remained in modest expansion at 51.9, while manufacturing contracted steeply, with output falling to 45.4 and the manufacturing PMI sliding to 46.2.

Survey data pointed to subdued client confidence, rising cost pressures and ongoing political and economic uncertainty. New business rose only marginally, held back by weaker services growth and a deepening downturn in manufacturing orders. Export demand was especially weak, with firms citing falling sales to Europe and the US, though some reported stronger demand in emerging markets.

Manufacturing was further hampered by plant stoppages at Jaguar Land Rover, highlighting how sector-specific disruptions can ripple through supply chains. The drop in factory output was the fastest since March, underlining the fragility of industrial momentum.

Employment fell again, extending a run of job losses dating back to late 2024. Many firms reported hiring freezes or chose not to replace leavers as they sought to control costs. Backlogs of work continued to shrink, reflecting excess capacity.

Input costs rose sharply, driven by wage growth and suppliers passing on higher payroll expenses. Energy, food and technology costs also contributed. While service providers raised selling prices at a solid pace, manufacturers faced intense competitive pressure that curbed their ability to pass on costs, resulting in the slowest factory-gate price inflation since late 2024.

Business expectations for the year ahead weakened to a three-month low. Service providers cited squeezed client budgets and uncertainty, while manufacturers showed more optimism, pointing to planned investment and technology-related demand, particularly around data centres.

For finance teams in the UK, the data highlight a tightening operating environment. Sluggish demand, rising costs and persistent uncertainty will complicate forecasting and liquidity planning. Exporters face particular challenges in managing FX volatility and credit exposure, while domestic firms may need to prepare for a prolonged squeeze on margins.

Tariffs weigh on US but confidence steadies

In the US, business activity slowed for a second straight month. The composite PMI eased to 53.6 in September from 54.6 in August, still comfortably in expansionary territory but the lowest since June. Services led overall growth, though their PMI slipped to 53.9. Manufacturing output also slowed, with the PMI dropping to 52.0 from August’s 39-month high of 53.0.

Demand growth softened. Services firms saw the weakest rise in new orders for three months, with domestic weakness offsetting a rare uptick in export demand. Manufacturers reported only marginal gains in new business, with export losses accelerating due to tariffs.

Employment grew for a seventh month, but the pace was slower. Services continued hiring, albeit with signs of caution, while manufacturers reported job losses tied to cost cutting.

Tariffs remained the dominant theme in price dynamics. They were widely cited as the main driver of input cost inflation, especially in manufacturing. Service sector input costs also rose steeply, though firms struggled to pass these on in a competitive environment. Selling price inflation cooled to its weakest since April, led by goods producers.

Inventories rose sharply, with manufacturers reporting the largest build-up of unsold stock in over 18 years of PMI data. This was linked to slower sales growth and ongoing supply chain disruptions, including tariff-related delays.

Despite near-term pressures, confidence improved to a four-month high. Lower interest rates were seen as providing a partial offset to tariff effects, and manufacturers noted that protectionist measures could stimulate domestic production over time.

The US data suggest a more resilient growth outlook than in Europe, but with notable caveats. Tariff-driven cost pressures complicate procurement and hedging decisions, while swelling inventories could affect supplier payments and working capital cycles. Softer selling price inflation may also limit revenue gains even as input costs rise.

Treasury implications of uneven growth

Across the Eurozone, UK and US, September’s PMI results point to moderate but uneven expansion. Services remain the mainstay of growth, but manufacturing momentum is slipping. Price pressures are cooling, though not evenly, and confidence is fragile. For corporate treasurers, the implications are far-reaching. Liquidity planning will require particular attention, as faltering order growth in Europe and the UK threatens cash inflows while rising inventories in the US may tie up working capital. Funding strategies must also adapt to diverging monetary policy paths. Softer inflation and weaker growth could encourage rate cuts in Europe, while in the US borrowing costs may ease further if the Federal Reserve continues to loosen policy. These developments will shape debt management and refinancing decisions in the months ahead.

Currency risk also looms large. Diverging regional performance and policy expectations are likely to fuel exchange rate volatility, putting pressure on exporters in particular. Treasurers must evaluate whether their hedging approaches are robust enough to cope with renewed swings.

Supply chain resilience remains another priority. The contrasting fortunes of Germany and France, the UK’s automotive disruptions and the US tariff landscape all underline the need to map exposures carefully. Treasurers will need to assess the reliability of counterparties and ensure contingency measures are in place.

Finally, inflation dynamics demand a flexible approach. Input costs are softening in parts of Europe but remain elevated in the US, requiring nuanced procurement and pricing strategies. The challenge lies in balancing cost control with competitiveness, while maintaining contract terms and supplier agreements that reflect shifting conditions.

As 2025 enters its final quarter, the flash PMIs signal that the global economy is neither stalling nor surging. For treasurers, the task is to navigate this middle ground: balancing cautious optimism with vigilance, and ensuring that liquidity, funding and hedging frameworks are strong enough to withstand continued uncertainty.