Eurozone holds steady growth in August as ECB rate hike looms

The eurozone's private sector maintained its growth momentum in August, with the S&P Global Composite PMI ↗ 1.01% holding at 52.0, matching July's eight-month high and keeping the bloc on track for a solid third quarter, according to final data released Thursday.investing+1

The Services PMI Business Activity Index slipped marginally to 51.6 from 51.7 in July, coming in slightly below the preliminary estimate of 51.7. Despite the dip, the reading remained above the 50.0 threshold separating expansion from contraction, and the composite figure stayed close to its long-run average of 52.3.economictimes+1

Manufacturing Momentum Offsets Services Softness

The data pointed to a broadening recovery, with manufacturing activity gaining ground even as services growth cooled slightly. New export orders across the private sector rose for the first time in four and a half years, driven by stronger demand for manufactured goods. August also marked the first month of net job creation in 2026, with services employment growing at its fastest pace in eight months.investing+2

"August's PMI data puts the euro area on track for a solid quarter of growth in Q3. Momentum in the industrial economy has picked up nicely and the service sector has shaken off the initial weakness seen after energy prices surged at the start of the Middle East war," said Joe Hayes, senior principal economist at S&P Global Market Intelligence.investing

Inflation Pressures Complicate ECB Outlook

Price pressures remained a concern. Services input costs and output charges both climbed to three-month highs, and broader inflation measures stayed elevated above pre-conflict levels. Official data released earlier this week showed eurozone inflation had risen back above 3% in August, adding pressure on the European Central Bank ahead of its September 10 meeting.economictimes+1

Hayes noted that the August figures indicated "a stalling of the disinflationary trend" and suggested the ECB "may feel a tightening of policy at next week's meeting is now justified".investing

Uneven Growth Across the Bloc

The expansion remained geographically lopsided. Spain and Italy led the way with strong increases in activity, while Germany posted its fastest growth since March. France was the outlier, contracting for an eighth consecutive month. The data were collected between August 10 and August 25.investing+2