Business activity across the eurozone expanded at a slightly faster pace in August, supported by a strengthening manufacturing sector, according to preliminary PMI data released by S&P Global.
The S&P Global Flash Eurozone Composite PMI Output Index increased to 52.1 from 52.0 in July, reaching its highest level in nine months. The reading remained above the 50 threshold separating expansion from contraction and marked a second consecutive month of growth in private sector activity.
Manufacturing growth reaches multi-year high
Manufacturing provided the strongest contribution to the improvement, with the Flash Eurozone Manufacturing Output Index rising to 53.4 from 52.9 in July. This was the highest reading in 54 months.
The headline manufacturing PMI also strengthened, climbing to 52.8 from 51.9 and reaching its highest level since May 2022.
Germany was among the strongest contributors to the industrial recovery, with manufacturing production increasing at its fastest rate since January 2022.
Services continued to expand but showed less momentum. The Flash Eurozone Services PMI Business Activity Index remained unchanged at 51.7, indicating another month of modest growth.
New export orders return to growth
Demand conditions improved further during August, with new orders increasing for a second consecutive month.
The pace of growth accelerated to its strongest level in 40 months, providing further evidence of improving demand across the eurozone economy.
International business also showed a notable turnaround. New export orders increased for the first time in four-and-a-half years, ending an extended period of declining overseas demand.
Eurozone employment rises for first time in 2026
Companies increased their workforce during August, marking the first overall rise in employment recorded so far in 2026.
Service providers led the improvement by adding staff, while manufacturers reported a fractional increase in employment.
The manufacturing increase was particularly significant as it brought an end to 38 consecutive months of job reductions across the sector.
Inflationary pressures continue to ease
Cost pressures moderated during the month, with input price inflation slowing to its weakest rate since February.
Businesses also increased their selling prices at a slower pace. Output price inflation eased for a third successive month and reached its lowest level since March.
The moderation was broad-based, with slower selling price increases reported across both manufacturing and services.
Business confidence slips despite stronger activity
Although current business conditions improved, companies became slightly less optimistic about future activity.
Business confidence declined to a three-month low in August, suggesting that uncertainty continues to influence expectations despite the stronger economic data.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said the latest PMI readings were consistent with eurozone GDP expanding by approximately 0.3% during the third quarter.
He identified precautionary inventory building in response to Middle East supply-chain disruptions, stronger demand for AI-related technology products and increased equipment requirements linked to defence spending as factors supporting the manufacturing recovery.
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