Eurozone Private Sector Growth At 3-Month High

(RTTNews) - The euro area private sector expanded at the fastest pace in three months in August underpinned by strong upturn in services activity, final survey results from S&P Global showed on Wednesday.

The HCOB composite output index posted 51.0 in August compared to 50.2 in July. The final reading was slightly below the initial estimate of 51.2.

The score signaled a re-acceleration of growth. The improvement was entirely driven by services activity, which advanced the most in three months. Manufacturing output contracted further, extending the current sequence of fall to 17 months.

The services Purchasing Managers' Index improved to 52.9 in August from 51.9 in the previous month. The flash score was 53.3.

Although output growth quickened in August, there was a further moderate decrease in the incoming new business. A steeper fall in manufacturing sales was more than offset by a quicker improvement in service sector new orders.

Export business presented a headwind to sales as orders from non-domestic clients shrank at the fastest pace since January.

Further, capacity pressures continued to dwindle as evidenced by a seventeenth successive monthly reduction in backlogs of work.

There was a reduction to workforce numbers in August. Job creation across the service sector was narrowly cancelled out by headcount reductions across the manufacturing industry.

Firms anticipate output to grow over the coming twelve months but the degree of optimism slipped to its lowest in the year-to-date.

On the price front, input price inflation rose at the weakest pace in 2024 so far and prices charged for goods and services increased at the quickest pace since April.

A major force behind the acceleration in Eurozone activity was France, where private sector output grew at the quickest pace since May 2022 due to the boost from the Olympic Games. Still, France ranked behind Spain.

Improved growth was seen in Italy, while Germany bucked the trend by posting a second consecutive decline in private sector activity.

The downturn in Germany's private sector deepened in August. The composite output index slid to 48.4 from 49.1 and also stayed below the flash reading of 48.5. The services PMI registered 51.2, down from 52.5 in the previous month. The flash score was 51.4.

Meanwhile, France's composite output index rose to a 27-month high of 53.1 from 49.1 in July. This was the first time since April that the private sector activity has risen. The flash score was 52.7.

The services PMI posted 55.0, in line with the flash estimate, and down from 50.1 in the prior month.

Italy's private sector picked up in August as services activity rose marginally and the rate of contraction in manufacturing eased notably. The composite output index improved to 50.8 from 50.3 in July. The services PMI fell to 51.4 from 51.7 in July. Spain's private sector economy continued to expand in August. The composite index hit 53.5, up from 53.4 in July. The services PMI improved to 54.6 from 53.9 in the previous month.