The final data published by HCOB showed that activity in the eurozone private sector rose modestly in August, ending a two-month decline, driven by a quicker upturn in services activity. However, new orders, employment and business confidence are determined.
The Eurozone Composite PMI Output Index, which assesses the change in activity in the manufacturing sector and the service sector, rose in August to 51.0 points from 50.2 points in July. Economists had expected a rise to 51.2 points. The index remains above the 50 point mark, indicating an expansion in activity in the sector, for the 6th month in a row, which is the longest sequence in over two years. Meanwhile, services PMI reached 52.9 (3-month high) compared to 51.9 in July and forecasts at 53.3.
The data also showed that new orders in the private sector declined again in August, but only slightly. Weighing on demand was a sharp and steeper deterioration in sales across the manufacturing sector, more than offsetting a slightly quicker improvement in service sector new orders. Meanwhile, new export orders recorded the sharpest decline since January. The backlog of work declined again (for the 17th month in a row), while the rate of decline was the strongest since February. Employment in the private sector declined for the first time since the beginning of 2021, but only slightly, as sustained (albeit softer) job creation across the service sector was only narrowly canceled out by headcount reductions across the manufacturing industry. As for the outlook, private sector companies expect the level of activity to be higher in the next 12 months, but the degree of optimism has fallen to its lowest level since the beginning of the year. Meanwhile, input cost inflation rose at a pace that was the weakest in 2024 so far and broadly aligned with its pre-pandemic average. However, output charges rose at the quickest pace since April.