The activity of the private sector in the euro zone recorded a slight improvement in August, according to the preliminary estimate of the composite PMI index. The indicator stood at 52.1 points compared to 52 in the previous month, its highest level in nine months, which would suggest an increase in GDP of the euro area of 0.3% between July and September.
In detail, the manufacturing PMI reached its most intense expansion rate in 51 months in August, climbing to 52.8 points from 51.9 in July. Meanwhile, the services PMI remained unchanged at 51.7 points.
"A solid and sustained increase in total activity in August lays the groundwork for a significant increase in euro zone GDP in the third quarter, of around 0.3%," highlighted Chris Williamson, chief economist at S&P Global Market Intelligence.
The push from the industrial sector in the behavior of business activity during August would be linked to a new process of preventive stock accumulation, which helps to strengthen the goods-producing sector amid persistent disruptions in the supply chain from the Middle East. Logistical delays continue to be notably widespread throughout the month.
However, Williamson also emphasized the presence of positive signs of increased demand for technology products related to AI and a rebound in demand for equipment due to increased defense spending, factors that are particularly helping Germany to record growing improvements in its production. In the services sector, the increase in tourist spending is contributing to sustain economic growth, especially outside of France and Germany.
Thus, although the companies surveyed point out that high prices continue to weigh on demand, inflationary pressures "have shown signs of greater easing," so the expert believes that the ECB will be particularly supported by seeing that inflation in prices charged in the services sector is moderating again, while inflation in goods prices is also continuing to decrease.
However, although the flash reading of the PMI points to solid GDP growth in the third quarter, that companies show for the first time in 2026 the intention to hire and that inflation remains high compared to historical standards, it makes it likely that an aggressive bias of monetary policy will be maintained, "and new imminent interest rate hikes cannot be ruled out."