The Paris Olympics has had a positive impact on business activity in the eurozone, with output growth hitting a three-month high in August. The HCOB Flash Eurozone Composite PMI Output Index rose to 51.2, driven by a pick-up in the service sector. However, manufacturing continued to lag behind.
The growth in business activity in August was primarily due to a renewed expansion in France, where output saw the largest increase in almost a year and a half. Despite this positive trend, chief economist Dr. Cyrus de la Rubia warns that the underlying fundamentals may be shakier than they appear. While the services sector in France is thriving, the overall pace of growth in the services sector in Germany has slowed down, and the eurozone’s manufacturing sector remains in decline.
In comparison to the eurozone, the UK is experiencing its fastest rise in private sector output since April. The data from S&P Global’s latest poll of purchasing managers shows that business activity in the UK is accelerating, with strong demand leading to firms taking on more staff. This growth is reflected in the Flash UK PMI Composite Output Index, which rose to 53.4 in August.
France’s economy is also showing signs of growth, with the country experiencing its best month since March 2023. The services sector is performing well, attributed to the boost from the Olympic Games. However, the manufacturing sector in France continues to contract due to weak demand. Overall, the positive momentum in the eurozone and individual countries like the UK and France is encouraging, but concerns about the sustainability of this growth remain.
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