The euro area's private sector saw a continued rise in overall business activity in August, with a slightly faster pace of growth than the previous month as output in the manufacturing sector picked up amid a further rise in new orders.
The S&P Global Flash Eurozone Composite PMI Output Index rose to a nine-month high of 52.1 in August 2026 from the previous month's 52, according to data from S&P Global published Friday. The seasonally adjusted provisional reading marks the strongest overall growth rate since November 2025 and sits above the consensus estimate of 51.7.
Business activity in the manufacturing sector accelerated at its quickest pace in four-and-a-half years, with the PMI reaching a 51-month high of 52.8, against the prior month's 51.9 and the consensus estimate of 51.8. On the services side, the PMI stood at 51.7, unchanged from the previous month and ahead of the market forecast of 51.5.
New orders also increased further in August, bolstered by new export orders, which saw a return to growth for the first time in four-and-a-half years.
"We are again seeing reports of precautionary stock building helping support the goods-producing sector amid the ongoing supply chain disruptions emanating out of the Middle East, with supply chain delays again remaining worryingly widespread in August. However, there are also encouraging signs of rising demand for AI-related tech goods and rising equipment demand thanks to higher defence spending, notably helping Germany in particular achieve increasingly impressive production gains," S&P Global Market Intelligence Chief Business Economist Chris Williamson said, noting that the eurozone is poised to see "a robust increase in third quarter GDP of around 0.3%" on the back of the sustained "solid" business activity growth in August.
The bloc's two largest economies diverged in performance, with business activity in Germany "modestly" increasing, whereas France recorded a continued decline in output. The rest of the euro area, meanwhile, saw the fastest growth in business activity since April 2022.
Business confidence softened slightly across the bloc, waning in the services sector while improving to its highest level in six months in the manufacturing industry. In terms of prices, both input and output costs rose at a slower rate.
"Although high prices reportedly continue to dampen demand, price pressures have shown signs of further easing. Policymakers will be especially encouraged to see services selling price inflation back down to the joint-lowest so far this year (alongside March), with goods price inflation also continuing to moderate," Williamson added. "However, with the flash PMI signalling solid third quarter GDP growth, a return to hiring by companies for the first time this year, and inflation remaining elevated by historical standards, a hawkish bias is likely to be maintained and further imminent rate hikes cannot be ruled out."
