Eurozone Private Sector Growth Moderates In August

Eurozone private sector logged robust growth in August but the momentum faded slightly from July’s 15-year peak, final data from IHS Markit showed on Friday.

The final composite output index fell to 59.0 in August from 60.2 in July, which was the highest since June 2006. The reading stood below the flash 59.5.

Nonetheless, a reading above 50.0 indicates expansion in the sector. The score indicated one of the fastest rates of growth seen in the past 15 years.

There were softer increases in output across both the manufacturing and service sectors. Services output increased at the second-fastest rate since mid-2006, behind July.

The services Purchasing Managers’ Index came in at 59.0 in August, down from 59.8 in the previous month and the flash score of 59.7.

“… strong quarter-on-quarter rise in GDP is on the cards for the third quarter, and we’re certainly on track for the eurozone economy to be back at pre-pandemic levels by the end of the year, not sooner,” Joe Hayes, a senior economist at IHS Markit, said.

Among big-four member countries, Italy bucked the otherwise broad-based slowdown trend and registered the fastest output growth for over 15 years. Only France registered a softer increase in output than Italy.

Germany’s private sector expanded sharply again in August. However, at 60.0, the composite output index was down from July’s all-time high of 62.4 and the lowest for three months. This was also below flash score of 60.6.

The final services PMI dropped to 60.8 from a record 61.8 in the previous month. The flash reading was 61.5.

France’s private sector growth eased to a four-month low in August. The final composite output index dropped to 55.9, in line with flash estimate. Both manufacturers and service providers registered softer rates of output growth over the month.

The services PMI posted 56.3 in August, down from 56.8 in July. The flash score was 56.4.

Meanwhile, Italy’s private sector expanded at the fastest pace since June 2006. The composite output index rose to 59.1 in August from 58.6 in July. At the same time, the services PMI held steady at 58.0. The index signaled the joint-quickest growth for 14 years.

Spain’s private sector expanded strongly in August albeit at a slower pace than in July. The composite output index posted 60.6, down from 61.2 in July and eased further from the near-record high seen in June. The services PMI dipped to 60.1 from 61.9 a month ago.

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