- Prior 51.9
- Composite PMI 51.0 vs 51.2 prelim
- Prior 50.2
A slight revision lower but the readings are still better than July. It mostly owes to a jump in French business activity though, which is arguably a one-off thanks to the Paris Olympics. One major detail to be mindful of is that the employment index dipped below the 50.0 threshold for the first time since 2021. It is but a fractional decline but it does signal that the latest slowdown in the economy is starting to impact the labour market a little perhaps.
HCOB notes that:
“The Olympic Games in Paris brought plenty of victories, and the French service sector was certainly among the winners. The latter helped drive accelerated growth in the eurozone's service sector for August. But the big question is whether this boost is sustainable. The positive vibes from the Games and the ongoing Paralympics might carry through into September in part, but we expect the slowdown in growth, which started in May, to likely resume in the coming months.
“As for the ECB, they are probably breathing a small sigh of relief thanks to the latest prices data. Although service providers nudged up their prices slightly more in August compared to July, overall cost pressures, especially those driven by wages, have eased. This will likely weigh more heavily in the ECB's considerations. Coupled with the favourable inflation numbers Eurostat recently released for August, the ECB is likely to see this as further justification for cutting interest rates at their September 12 meeting.
“The “Olympic effect” is also set to ensure that the eurozone's GDP will show growth in the third quarter. It's encouraging that the service sector is showing growth across the board geographically, with the HCOB PMI above 50 points in all four major eurozone economies. However, it’s a tale of two sectors: while services are driving the growth, the manufacturing sector remains stuck in recession, with conditions worsening in several countries, including Germany and France.”
