Eurozone Growth Remains Modest in August

The eurozone economy extended its modest expansion in August, with the HCOB Eurozone Composite Purchasing Managers’ Index (PMI) inching up to 51.0 from 50.9 in July, according to S&P Global data released Wednesday.

PMI at 12-Month High, But Growth Still Weak

The August figure marked the highest level in a year, though it still reflected only marginal growth. The PMI remains barely above the 50.0 threshold, which separates expansion from contraction, signaling that the region is far from a robust recovery.

Services Slow, Manufacturing Shows Resilience

The report noted a slowdown in services sector activity, which had been the main driver of growth earlier this year. However, this was offset by an improvement in manufacturing output, which helped keep the overall index in positive territory.

New Orders Rise for the First Time Since May 2024

Encouragingly, the survey highlighted a pickup in new orders, the first increase in over a year. This suggests potential support for future economic activity, particularly if manufacturing momentum continues and consumer demand stabilizes.

Outlook

While the data points to fragile but ongoing expansion, analysts caution that risks remain, particularly from geopolitical uncertainty, U.S. tariffs, and domestic inflation concerns. The European Central Bank, which recently paused its rate-cutting cycle at 2%, may take comfort from signs that inflation pressures in services are easing—but sluggish growth could keep the debate alive over whether additional easing will be needed later in 2025.