- Prior 51.0
- Manufacturing PMI 50.5 vs 49.5 expected
- Prior 49.8
- Composite PMI 51.1 vs 50.7 expected
- Prior 50.9
It's been a while but for a change at least the manufacturing sector is the one doing the heavy lifting in August. The better showing there sees the euro area economy fare better on the month, led by Germany of course. The manufacturing reading itself is a 38-month high with the output index improving to hit a 41-month high. Besides that, employment conditions remain positive as well with job creation stretching on for a sixth straight month. Price pressures did pick up on the month but the pace of inflation is still softer than the series average at least. HCOB notes that:
“Things are getting better. Economic activity has picked up in both manufacturing and services. 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.
Manufacturing output has increased for six straight months, with Germany leading the charge. France, which had been a drag in June and July, showed signs of stabilising in August. The same goes for services: France’s recession seems to be tapering off, while Germany is showing growth even if only marginal.
U.S. trade policy is leaving its mark. Foreign orders in the eurozone manufacturing sector have declined for the second month in a row. Germany had been holding up well, possibly due to pre-emptive purchases from the U.S., but now it's also seeing a drop in orders. France has climbed out of the deep hole of falling foreign demand over the last months, but incoming orders are still on the decline.”
