The eurozone manufacturing industry reported the fastest growth in nearly three-and-a-half years in August, as business activity in the bloc rose, according to S&P Global’s HCOB Flash Eurozone PMI survey.
The composite PMI index rose to 51.1, up from 50.9 in July, which was the strongest increase in 15 months.
‘Companies also increased their staffing levels, the sixth month running in which this has been the case,’ S&P Global noted. ‘Meanwhile, inflationary pressures strengthened, with both input costs and output prices rising at sharper rates in August.’
Manufacturing sector growth
The manufacturing sector drove much of the business growth in the period, with the manufacturing PMI standing at 52.3, up from 50.6 in July – a 41-month high.
Elsewhere, services business activity rose for the third month in a row, albeit only slightly. The services PMI stood at 50.7 for the month, down from 51.0 in July, a two-month low.
The largest economy in the eurozone, Germany, reported a third successive monthly increase during August, the data showed, boosted by manufacturing production, while activity in France stabilised.
Overall, new orders returned to positive growth after a 14-month decline, even despite new export orders, including intra-Eurozone trade, falling for the fifth consecutive month.
‘Coping reasonably well’
“Things are getting better. Economic activity has picked up in both manufacturing and services,” commented Dr. Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “Overall, we’ve seen a slight acceleration in growth over the past three months. Despite headwinds like U.S. tariffs and general uncertainty, businesses across the eurozone seem to be coping reasonably well. The EU Single Market is likely playing a helpful role here, especially since most export and tourism revenues are generated within the EU.
“The European Central Bank might wince a little at the rising cost pressures in the services sector. After all, it’s banking on slower wage growth to help bring inflation down in this crucial part of the economy. That said, there’s a bit of relief in the fact that inflation in service-sector selling prices has remained more or less steady.” Read more here.
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