Eurozone business boosts Olympics but faces slowing demand

(MENAFN) In August, Eurozone business activity received a temporary boost, driven by the hosting of the Olympic Games in France, but is expected to slow once the Paralympics conclude due to persistently weak demand. The Standard & Poor's Hamburg Commercial Bank Composite Purchasing Managers' Index (PMI), which reflects the overall economic health of the region, rose to 51 in August from 50.2 in July. This figure remained above the crucial 50-point threshold that indicates economic expansion, marking the sixth consecutive month of growth. However, it was slightly below the initial estimate of 51.2, suggesting that the improvement may be less robust than anticipated.

France's services sector experienced its most significant expansion in over two years, buoyed by the Olympic Games. In contrast, Germany's growth continued to decelerate for the third consecutive month, signaling a loss of momentum in Europe’s largest economy. The BGA business lobby reported deteriorating morale among German exporters, and the Kiel-based Institute for the World Economy (IfW) projected a 0.1 percent contraction in the German economy for the year. Meanwhile, the UK saw its services activity grow at the fastest rate since April, with easing price pressures indicating more stable inflation expectations following the July elections.

Despite these positive signals, overall demand in the 20-nation Eurozone declined for the third month running, suggesting a potential slowdown ahead. The composite new business index fell to 49.1, just above July's 49-point level but below the 50-point mark. Although the services sector PMI improved to 52.9 from 51.9, mitigating the ongoing contraction in manufacturing, service providers’ confidence in future business conditions waned. The business expectations index dropped to 59.1, its lowest point this year, reflecting a cautious outlook for the coming months. 

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