Eurozone business activity showed ‘sustained’ growth in August, boosted by stronger output in the manufacturing sector, according to provisional PMI data from S&P Global.
As well as an increase in output, the eurozone manufacturing sector reported a rise in new output, and a first expansion in new export business in four and a half years, the data showed.
The seasonally adjusted Eurozone Composite PMI Output Index rose to 52.1 in August from 52.0 in July, marking a second consecutive month of growth and the strongest expansion since November 2025.
‘Solid rise’
“A sustained, solid rise in business activity in August sets the eurozone up for a robust increase in third quarter GDP of around 0.3%,” commented Chris Williamson, chief business economist at S&P Global Market Intelligence.
“The manufacturing sector is again the star performer, enjoying its strongest growth for four-and-a-half years, with the services economy providing a supporting role, notching up another month of decent growth after the malaise seen in the second quarter.”
The Manufacturing PMI increased to 52.8 from 51.9, reaching its highest level since May 2022, while the Manufacturing Output Index rose to 53.4 from 52.9, its strongest reading in 54 months. Germany recorded its fastest increase in manufacturing production since January 2022.
“We are again seeing reports of precautionary stock building helping support the goods-producing sector amid the ongoing supply chain disruptions emanating out of the Middle East, with supply chain delays again remaining worryingly widespread in August,” Williamson added. “However, there are also encouraging signs of rising demand for AI-related tech goods and rising equipment demand thanks to higher defence spending.”
Services activity continued to expand at the same pace as in July, with the Services Business Activity Index holding at 51.7. Business activity in Germany increased modestly, while France recorded another decline. The rest of the euro area registered its fastest expansion since April 2022.
New orders increased modestly, with the rate of expansion reaching a 40-month high, while employment also increased across the eurozone for the first time in 2026.
Price pressures
Price pressures, too, showed some signs of easing. Input cost inflation slowed to its weakest rate since February, while output price inflation declined for a third consecutive month to its lowest level since March. However, price pressures remained elevated by historical standards.
“Although high prices reportedly continue to dampen demand, price pressures have shown signs of further easing,” said Williamson. “Policymakers will be especially encouraged to see services selling price inflation back down to the joint-lowest so far this year (alongside March), with goods price inflation also continuing to moderate.
“However, with the flash PMI signalling solid third quarter GDP growth, a return to hiring by companies for the first time this year, and inflation remaining elevated by historical standards, a hawkish bias is likely to be
maintained and further imminent rate hikes cannot be ruled out.”
Business confidence softened slightly in August, with sentiment about the year-ahead outlook falling to a three-month low, the data showed. Read more here.
