Eurozone’s services sector showed improved growth in August, with PMI Services index rising to 52.9 from July’s 51.9, while the PMI Composite increased to 51.0 from 50.2. Both readings marked three-month highs, signaling a strengthening in overall economic activity. According to HCOB, input cost inflation eased to its lowest point in 2024, though the rate of increase in output charges ticked up slightly.
Country-specific data revealed a mixed picture, with Spain leading the pack with a Composite PMI of 53.5, a two-month high, followed by France at 53.1, a 27-month high. Ireland’s Composite PMI hit 52.6, its highest in five months, while Italy recorded a two-month high at 50.8. On the other hand, Germany saw its Composite PMI fall to 48.4, a five-month low.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, pointed to the “Olympic effect” as a key factor ensuring GDP growth in Eurozone for Q3. While services sector is performing well across all major Eurozone economies, the manufacturing sector remains in recession, with worsening conditions in key countries like Germany and France.
On the inflation front, service providers slightly increased their prices in August, but cost pressures, particularly those driven by wages, have eased. This will likely be a positive signal for ECB, which may “breathe a small sigh of relief” as it weighs its policy decisions. Combined with favorable inflation data from Eurostat, these factors could provide the ECB with further justification to cut interest rates at its upcoming meeting on September 12.
