Eurozone private sector activity gained modest momentum in August, with Composite PMI rising from 50.9 to 51.1, its highest level in 15 months. Manufacturing led the improvement, climbing from 49.8 to 50.5, a 38-month high. Services softened slightly from 51.0 to 50.7. Growth remains fragile, but the data signals that businesses are coping better than expected with the current trade and policy backdrop.
Hamburg Commercial Bank’s Cyrus de la Rubia noted that despite headwinds from U.S. tariffs and lingering uncertainty, the EU’s single market has helped cushion the blow, with domestic demand and tourism acting as stabilizers.
Manufacturing output has now expanded for six straight months, driven by Germany. France, previously a drag, showed signs of stabilization in both manufacturing and services. However, US trade policy continues to bite. Eurozone manufacturing foreign orders fell for the second month in a row, with Germany now also seeing declines after holding up earlier in the year.
While cost pressures in services remain an ECB concern, the steadiness in selling-price inflation provides “a bit of relief”.
