BRUSSELS: Eurozone business activity continued to pick up in September to hit a 27-month high, a closely watched survey showed Monday, but doubts remained over whether the recovery was sustainable.
The Composite Purchasing Managers' Index compiled by Markit Economics jumped to 52.1 points for September from 51.5 in August, pushing further beyond the 50-points boom-or-bust line.
The rise confirms a recovery for the embattled single currency bloc, which finally exited 18 months of recession in the second quarter this year, growing by a modest 0.3 percent.
The emergence from recession is again being led by Germany, where better days helped propel Chancellor Angela Merkel to a resounding electoral victory on Sunday, though other countries are beginning to lift out of the doldrums as well.
"It is particularly encouraging to see the business situation improved across the region," said Chris Williamson, chief economist at Markit.
"Although the upturn continued to be led by Germany, France saw the first increase in business since early-2012 and elsewhere growth was the strongest since early-2011," he said.
Markit also said the employment picture, though still poor, was improving in the eurozone, a key point of concern with record joblessness well anchored in several countries.
"Employment continued to fall, though it is reassuring that the rate of job losses eased to only a very modest pace, suggesting that employment could start rising again soon," Williamson said.
The biggest gain in activity was seen in the services sector, but manufacturing continued to improve as well.
Analysts remained cautious however and warned that a full recovery may still be out of grasp.
"September's rise in the eurozone's composite PMI suggests that the bloc's recovery continued in Q3," said James Howat of Capital Economics.
"But there are still good reasons to worry about the economic outlook," he said.
"Indeed, disappointing recent harder data ... suggest that the eurozone's recovery still rests on fragile foundations."
This view is held by Mario Draghi, head of the European Central Bank, who warned earlier this month that whatever recovery there was remained tenuous.
"I am very, very cautious about recovery. I can't share the enthusiasm," Draghi said after the last ECB policy meeting.
But eurozone leaders, especially those in the crisis-struck southern periphery, have latched on to these green shoots as signs that austerity policies have worked and that better days are imminent.
Analysts meanwhile fear that the good news, no matter how modest, will lead to complacency, allowing promised reforms to fall to the wayside.
"... More needs to be done in the coming months to nurture the recovery," said Tom Rogers, senior economic adviser to the EY Eurozone Forecast.
European banking union, which some fear Germany may now try to water down, and heightened vigilance by the ECB to lending conditions, must remain priorities, he said.
Earlier this month EU Economic Affairs Commissioner Olli Rehn also warned of slowing down reforms at the first hint of better news.
"Complacency ... is simply a luxury we cannot afford," he said.
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