According to the flash report from HCOB, business activity in the private sector of the eurozone unexpectedly improved in August, reaching its highest level since May. However, new orders continued to fall, while business sentiment dropped to the lowest in 2024 so far.
The eurozone composite PMI output index rose in August to 51.2 points from 50.2 points in July. An index value above 50 points indicates an expansion of activity in the sector. Economists had expected the index to drop to 50.1 points. The services PMI rose to 53.3 (4-month high) from 51.9 in July, while the manufacturing PMI fell to 45.6 points (8-month low) from 45.8 points. Economists had expected the services PMI to remain at 51.9 points and the manufacturing PMI to be 45.8 points.
HCOB said that new orders in the private sector recorded a third consecutive monthly decline, with the pace of reduction only slightly softer than in July. Meanwhile, new export orders declined for the 30th consecutive month and at the fastest pace since February. The data also pointed to the first decline in private sector employment in the last 8 months. Staffing levels were down in Germany and France, but rose elsewhere. Meanwhile, the latest fall in backlogs of work was solid and the most pronounced since February. In August, there was also a drop in confidence regarding the future outlook for output. Sentiment dropped to the lowest in 2024 so far and was below the series average. Reduced optimism was widespread, with confidence lower across Germany, France and the rest of the eurozone, as well as in both monitored sectors. As for the inflationary situation, the pace of input inflation eased to an eighth low, but the pace of output price inflation quickened in August. Selling prices increased at the fastest pace in four months, and at a stronger pace than the series average.