Economic Buzz: Eurozone economy continues to grow at a sluggish pace
Growth was held back by the service sector, which posted a marginal and slower upturn. Manufacturing, on the other hand, saw its strongest rise in production in almost three-and-a-half years.
August HCOB PMI data signaled an increase in eurozone business activity, as has been the case throughout 2025 so far. However, while the pace of expansion ticked up to a one-year high, it remained sluggish overall.
The service sector held back overall growth, with output rising only marginally. Nevertheless, for the first time since May 2024, private sector firms reported greater volumes of incoming new work and employment growth was its quickest in 14 months.
Business confidence saw little change from July and therefore remained sub-par relative to its long-term average, while input cost inflation accelerated. Firms responded with a faster rise in their prices charged.
The HCOB Eurozone Services PMI Business Activity Index dipped from July?s four-month high of 51.0 to 50.5, signaling a slower and marginal increase in output in August. Demand for eurozone services was virtually flat, with the respective index posting only fractionally above the 50.0 no-change level.
New business from overseas was a stronger drag on sales performances midway through the third quarter as new export orders fell at the fastest pace in three months. Backlogs of work were cleared further during the latest survey period, albeit to a lesser extent.
Business expectations were optimistic as companies anticipated higher activity over the coming 12 months. Inflationary pressures picked up across the euro area service sector.
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