Eurozone Private Sector Expands At Fastest Pace In 15 Months

(RTTNews) - Eurozone private sector expanded at the fastest pace in 15 months in August on stronger growth in manufacturing output despite challenges posed by U.S. trade tariffs. The HCOB flash composite output index climbed more-than-expected to 51.1 in August from 50.9 in July, survey results from S&P Global revealed Thursday. The score was seen at 50.7.

The robust expansion was driven by the manufacturing sector, where production increased the most in almost three-and-a-half years. Services activity registered growth for the third month but the expansion was only marginal. "Despite headwinds like U.S. tariffs and general uncertainty, businesses across the eurozone seem to be coping reasonably well," Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said.

"The EU Single Market is likely playing a helpful role here, especially since most export and tourism revenues are generated within the EU," de la Rubia added.

New orders returned to growth in August, thereby ending a 14-month sequence of decline. There were renewed expansion in both the manufacturing and services sectors. Meanwhile, new export orders decreased continuously since March 2022, with the latest decline the sharpest in five months.

Companies recruited more staff in August, extending the current sequence of job creation to six months.

The hiring of additional staff indicated that companies were able to keep on top of workloads despite the renewed increase in new business. As a result, backlogs of work continued to fall in August.

Regarding prices, the survey showed that input costs and output prices increased at faster rates in August. Input prices grew the most in five months and companies raised their output prices at the fastest rate in four months.

Manufacturers continued to scale back their purchasing activity in August. Stocks of purchases and finished goods also fell more quickly in August. At the same time, suppliers' delivery times lengthened for the third straight month.

Business confidence weakened to a four-month low and was weaker than the series average in August, the survey showed.

The largest euro area economy posted a third successive monthly increase in output on the back of a solid expansion in manufacturing production.

Germany's flash HCOB composite output index registered 50.9 in August, up from 50.6 in July. This was the highest score since March and was also above forecast of 50.2.

There was a solid acceleration in manufacturing output, while service sector nearly stagnated in August. The manufacturing PMI climbed to a 38-month high of 49.9 from 49.1, while it was expected to fall to 48.8.

Meanwhile, the services PMI dropped more-than-expected to 50.1 from 50.6 in July. The reading was seen at 50.3.

Elsewhere, France private sector activity showed signs of stabilization in August after a sustained period of contraction.

The headline HCOB composite output index posted 49.8 in August, down from July's 48.6. The flash reading was the highest in exactly a year. Both manufacturers and service providers logged small falls in August. The services PMI rose to 49.7, while it was forecast to remain unchanged at 48.5.

At the same time, the manufacturing PMI advanced unexpectedly to 49.9 from 48.2 in the previous month. The reading was forecast to fall to 48.0.