- Eurozone PMI rose to 52.1 in August, up from 52 in July, signaling continued expansion.
- Sustained activity suggests a robust third-quarter GDP increase of around 0.3 percent.
- Manufacturing led growth, its strongest expansion in four and a half years, with services providing support.
- Middle East conflict and US-Iran tensions keep the outlook cloudy, with supply chain delays worryingly widespread.
- Rising demand for AI tech and defense equipment boosts German production; tourism outside France and Germany also lifts activity.
Business activity in the eurozone edged up for a second month running in August, data showed Friday, buoyed by strong growth in manufacturing despite the supply chain snarls linked to war in the Middle East.
The eurozone purchasing managers’ index (PMI) published by S&P Global, an important gauge of the economy’s overall health, registered an August reading of 52.1 after 52 in July.
A reading above 50 indicates growth while a figure below 50 signals contraction.
“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 percent,” said S&P chief business economist Chris Williamson.
“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,” he wrote in a research note.
Business activity in the 21-country single currency area grew for the first time in four months in July, after the Middle East conflict triggered a surge in energy costs worldwide.
The US war with Iran still clouds the outlook, with “supply chain delays again remaining worryingly widespread in August”, Williamson said.
But he also noted “encouraging signs of rising demand for AI-related tech goods and rising equipment demand thanks to higher defence spending”.
Both trends were helping “Germany in particular achieve increasingly impressive production gains”, while tourism, notably outside France and Germany, was also boosting economic output.
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