In August, the euro area private sector experienced its fastest expansion in three months, driven by a significant upswing in services activity, according to final survey results from S&P Global released on Wednesday.
The HCOB composite output index rose to 51.0 in August, up from 50.2 in July, although slightly below the preliminary estimate of 51.2. This score indicates a renewed acceleration in growth, predominantly powered by the services sector, which saw its most substantial advance in three months. Conversely, manufacturing output continued its decline, marking the 17th consecutive month of contraction.
The services Purchasing Managers' Index (PMI) increased to 52.9 in August, up from 51.9 in July, though it fell short of the flash estimate of 53.3. While output growth accelerated in August, there was a moderate further decline in incoming new business. A pronounced drop in manufacturing sales was more than compensated by a faster rise in new orders in the service sector.
However, export business acted as a drag on sales, with orders from non-domestic clients shrinking at the fastest rate since January. Additionally, capacity pressures remained alleviated, evidenced by the seventeenth consecutive month of backlog reductions.
Employment figures revealed a decrease in workforce numbers in August. Job creation in the service sector was almost entirely offset by reductions in manufacturing headcounts. Firms remain optimistic about output growth over the next twelve months, though the level of optimism has reached its lowest point this year.
In terms of prices, input price inflation grew at its slowest rate in 2024 thus far, while prices charged for goods and services increased at the fastest pace since April.
A significant factor behind the acceleration in Eurozone activity was France, with private sector output growing at its quickest pace since May 2022, boosted by the Olympic Games. Nonetheless, France trailed behind Spain.
Italy also saw improved growth, while Germany diverged from the trend, posting a second consecutive decline in private sector activity. The downturn in Germany's private sector intensified in August. The composite output index fell to 48.4 from 49.1, remaining below the flash estimate of 48.5. The services PMI also declined to 51.2 from 52.5 in the previous month, below the flash estimate of 51.4.
Meanwhile, France's composite output index surged to a 27-month high of 53.1 from 49.1 in July, marking the first rise in private sector activity since April. The flash estimate was 52.7, and the services PMI posted 55.0, matching the flash estimate and surpassing the previous month's 50.1.
Italy's private sector gained momentum in August, with a slight rise in services activity and a considerable easing in the manufacturing contraction rate. The composite output index improved to 50.8 from 50.3 in July, while the services PMI decreased slightly to 51.4 from 51.7.
Spain's private sector continued its expansion in August, with the composite index rising to 53.5 from 53.4 in July. The services PMI also improved, climbing to 54.6 from 53.9 in the previous month.
