Manufacturing output in the euro area rose to its highest level since February 2022, offsetting stagnant services activity.
Euro area August Purchasing Managers’ Index data signaled resilient growth, driven by a sharp rebound in manufacturing. The manufacturing output PMI climbed to its highest level in 18 months, led by strength in Germany and France, while services activity remained unchanged despite declines in those core economies.
Price pressures eased across most PMI components, with composite input and output price indices falling. However, both remain above pre-Iran war levels. Consumer inflation expectations for three years ahead edged down by 0.1pp to 2.7% in July, while five-year expectations held steady.
The data supports expectations for a 25 basis point rate hike by the European Central Bank in September, as inflation concerns persist despite easing price trends.