PwC/AGEFI Monthly Barometer - September 2026

In collaboration with AGEFI Luxembourg

Economic Confidence Indicator

September 2026

The PwC Business Barometer rose to +2 in September, up from -1 in August, continuing a marked improvement in business sentiment.

Luxembourg’s consumer confidence also improved to -8 in August from -10 in July, although it remains firmly in negative territory and could come under renewed pressure if household energy costs rise further. Annual inflation stood at 2.2% in August, while energy prices were 5.8% higher YoY. The outlook for households has nevertheless become more challenging: diesel prices rose above €2 per litre, while heating oil reached €1.51 per litre. With winter approaching, renewed energy-price pressures could weigh on household spending and feed through inflation. STATEC’s revised forecast puts average inflation at 1.8% for 2026, down from 2.5%, with food inflation projected at 2.1%. However, the forecast predates the re-escalation of the conflict in the Middle East and does not reflect the subsequent rise in energy prices, with Brent crude oil approaching USD 100 per barrel in September. Indeed, the labour market remains a source of pressure. The unemployment rate stood at 6.3% in July, while registered jobseekers were 8.4% higher than a year earlier. Despite this, the OECD expects economic growth to gradually strengthen, with GDP projected to grow by 0.7% in 2026, though this remains subject to the same external risks.

The Eurozone economy is also showing tentative signs of renewed momentum, although this remains tested by renewed energy-price pressures. GDP expanded by 0.6% QoQ in Q2 2026, following stagnation in Q1, while the Composite PMI reached a 9-month high of 52.0 in August, supported by stronger manufacturing activity. Spain and Portugal expanded by 0.7% and 0.8% respectively, outperforming the bloc’s largest economies, while Germany, France and Italy each grew more modestly. Inflation, however, has re-emerged as a key concern. Annual inflation accelerated to 3.3% in August from 2.9% in July, while services inflation, by contrast, eased to 3.0%. Renewed price pressures have contributed to a broad sell-off in government bond, with benchmark yields in Germany and the Netherlands reaching 15-year highs, France’s an 18-year high, and Spain’s a 3-year high in early September. With inflation now well above the ECB’s target, markets are increasingly pricing in the possibility of another rate hike at the ECB’s forthcoming meeting.

Globally, economic activity remains resilient, but financial conditions are becoming more challenging amid persistent inflation, fiscal and trade pressures. In the US, labour-market conditions strengthened in August, with nonfarm payrolls increasing by 162,000 and unemployment holding at 4.1%, pointing to a rebound after July’s decline. Meanwhile, fiscal pressures remain elevated, with government debt surpassing USD 40 trillion and the Treasury doubling the size of its debt buybacks amid rising borrowing costs. Elsewhere, UK inflation rose to 2.9% in July, while Japan’s 10-year government bond yield reached 3% in September—its highest since 1996, as investors reassessed inflation and fiscal risks. Against this backdrop, gold prices rose 11% in August towards USD 4,500 per ounce, while Trade policy added further uncertainty, with the Trump administration imposing tariffs of up to 100% on drones while moving to refund around USD 100 billion in “Liberation Day” tariffs. 

Ultimately, fiscal pressures and persistent geopolitical risks continue to cloud the outlook. The recovery, however, will increasingly depend on the evolution of energy prices, inflation and borrowing costs in the forthcoming months.