Eurozone growth stays sluggish as services falter

Eurozone economic growth edged only slightly higher in August, as resilience in manufacturing was offset by weaker momentum in services.

The S&P Global/HCOB composite Purchasing Managers’ Index (PMI) for the bloc rose to 51.0 from 50.9 in July. The reading marked a 12-month high but still pointed to modest expansion.

Manufacturing output posted its strongest increase in more than three years, helping to lift overall activity. By contrast, the services PMI slipped to 50.5 from 51.0, signalling a loss of pace in the sector that represents the largest share of eurozone GDP.

The survey also showed new orders rising for the first time since May 2024, driven largely by domestic demand. Export orders fell sharply, however, underscoring weaker demand from outside the bloc.

National performance was mixed. Spain continued to lead growth despite a slight slowdown, while Italy gained momentum. Germany, the region’s largest economy, recorded slower expansion, and France remained in contraction territory with a PMI of 49.8.

Employment increased at its fastest rate in 14 months, buoyed by job creation in services. Factories, however, continued to reduce headcount. At the same time, input costs and selling prices climbed at their fastest pace in several months, highlighting inflationary pressures at a moment when consumer prices in the bloc remain above the European Central Bank’s two per cent target.

The eurozone economy has now managed to avoid contraction for five consecutive months, though analysts said momentum remains fragile amid uneven performance across member states.