August business survey data signalled that growth of eurozone economic output held broadly steady at a solid pace. At 54.1, the Markit Flash Eurozone PMI® ticked higher from July’s final reading of 53.9 and remained at an expansionary level for the twenty-sixth successive month. The pace of increase was one of the fastest seen over the past four years.
Positive contributions to growth were provided by both the manufacturing and service sectors, with rates of expansion accelerating in both cases. Companies in both sectors indicated that output had been raised in response to increased levels of incoming new work, including stronger growth of new export orders at manufacturers.
This took the overall rate of increase in total new business a shade higher and to its fastest since May. This encouraged further job creation in the currency union, with employment rising for the tenth successive month. The rate of job creation at service providers held steady over the month, while that signalled for manufacturers was the steepest since July 2011.
The outlook for the eurozone economy also remained on the upside during August. Alongside growth in new orders and employment, backlogs of work rose at the strongest pace in 51 months, suggesting that current demand was still testing capacity at a number of firms.
Meanwhile, business optimism at service providers remained moderately positive despite slipping to an eight-month low. Confidence eased in Germany and outside of the big-two nations, but stepped up to its highest level since March 2012 in France.
On the cost front, average input prices rose for the seventh successive month in August. A further solid increase in costs at service providers, mainly due to higher wages and salaries, was partly offset by the first decline in manufacturers’ purchase prices since February.
Average output charges at eurozone companies decreased again in August, although the pace of decline remained only marginal. Selling prices for manufactured goods rose for the third month running, whereas service sector charges were reduced for the forty-fifth successive month.
By country, output growth accelerated in Germany, with the pace remaining above its second quarter average. Subsequently, job creation hit a 44-month peak. The performance of France remained subdued in comparison, but still positive overall with economic output rising for the seventh straight month. However, while the French service sector continued to expand, manufacturing production fell further. Job losses were also registered in France for the second month in a row.
Output growth remained marked outside of the ‘bigtwo’ nations in August. Economic growth accelerated to its highest since July 2007, leading to further solid increases in staffing levels at manufacturers and service providers alike.