Eurozone PMI August 2016


Composite PMI rises to seven-month high

Recent data suggest that business activity in the Euro area gained momentum in August, despite concerns over Brexit-induced headwinds. The preliminary Eurozone Composite Purchasing Managers’ Index (PMI), produced by IHS Markit, rose from 52.9 in July to 53.3 in August. The result overshot market analysts’ expectations of a softer rise to 53.0 and marked a seven-month high.

August’s improvement reflected stronger activity in the services sector, while conditions in the manufacturing sector remained broadly stable. Output growth accelerated mildly in both sectors, but employment growth slowed to a three-month low. New business was divergent, rising at the fastest rate in four months in the services sector but slowing in the manufacturing sector. Price pressures remained muted overall.

Regarding the two largest Eurozone economies, economic conditions improved notably in France but faltered in Germany. Elsewhere in the region, economic momentum weakened. Commenting on the result, IHS Market analysts stated that, “While the resilience of the PMI in August will add to the belief that the ECB will see no need for any immediate further stimulus, the weakness of the overall pace of expansion and disappointing trends in hiring, order books, business optimism and prices all suggest that policymakers will keep the door open for more stimulus later in the year.”

FocusEconomics Consensus Forecast panelists expect the Eurozone economy to expand 1.5% in 2016, which is unchanged from last month’s forecast. For 2017, panelists expect the economy to expand 1.4%.

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Eurozone PMI Chart

Euro PMI August 2016 0

Note: IHS Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction
Source: IHS Markit

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