Euro Area Business Activity Growth at 9-Month High

The Eurozone flash composite PMI rose to 52.1 in August 2026 from 52 in July, reaching a nine-month high and exceeding expectations of 51.7. Growth was supported by a stronger manufacturing performance, with factory output increasing at its fastest pace in four and a half years. Germany was a major contributor, recording its strongest manufacturing expansion since January 2022. New orders also increased, while export demand returned to growth for the first time in four and a half years, suggesting an improvement in external demand. Companies responded to the stronger activity by increasing employment, providing further evidence of resilience in the regional economy. At the same time, price pressures showed signs of easing, pointing to a gradual moderation in inflationary pressures. However, business confidence weakened during the month and remained relatively subdued, highlighting continued uncertainty over the economic outlook despite the stronger activity data.

The S&P Global Eurozone Composite PMI was revised higher to 52 in July 2026 from a preliminary estimate of 51.9 and 50 in June, moving back into expansion territory for the first time since March and signalling the strongest increase in business activity in eight months. The improvement was broad-based, with renewed growth in the services sector accompanied by a sustained and faster expansion in manufacturing output. Demand also strengthened, as new business increased for the first time since earlier this year and at the fastest pace since November, pointing to a solid start to the third quarter. Meanwhile, inflationary pressures continued to ease, with both input cost and output price inflation slowing further in July. Business confidence improved to its highest level in five months, reflecting growing optimism about the economic outlook.

The S&P Global Eurozone Composite PMI rose to 51.9 in July 2026 from 50.0 in June, well above market expectations of 50.3, a preliminary estimate showed. The reading signaled the first expansion in business activity in four months, supported by a renewed expansion in services and the fastest increase in manufacturing output since March 2022. Germany grew for the first time in four months, while France's downturn eased to a marginal contraction. Elsewhere, the rest of the eurozone recorded its strongest expansion in eight months. New orders rose at the fastest pace since April 2023, while export orders posted their smallest decline since March 2022. Employment increased for the first time this year, supply-chain pressures eased, allowing manufacturers to rebuild input inventories for the first time in three-and-a-half years, and both input cost and output price inflation moderated. Business confidence also improved to a five-month high, although it remained below pre-conflict levels.