Eurozone PMI data for August signals steady business activity

A rapid update on today's PMI figures:

• Spain's services PMI for August: 57.8 (prior month 58.3)
• Spain's composite PMI for August: 55.8 (prior month 56.5)
• Italy's services PMI for August: 55.2 (prior month 52.5)
• Italy's composite PMI for August: 53.6 (prior month 52.5)
• France's final services PMI for August: 48.0 (prior month 49.6)
• France's final composite PMI for August: 48.5 (prior month 49.4)
• Germany's final services PMI for August: 49.7 (prior month 49.8)
• Germany's final composite PMI for August: 51.8 (prior month 51.3)
• Eurozone's final services PMI for August: 51.6 (prior month 51.7)
• Eurozone's final composite PMI for August: 52.0 (prior month 52.0)

Turning to the broader euro area figures, private-sector business activity expanded at a rate matching July's, which represented the fastest growth in eight months.

Output and new order inflows both rose at a steady pace similar to July's, although the August demand improvement matched the strongest reading since November of the previous year.

Employment also grew for the first time this year, helped by another month of robust and widespread sales growth.

On price pressures, they remained fairly stable: input cost increases edged down slightly, while output prices rose at the same rate as in July. Still, both inflation measures stayed high historically and above levels seen just before the US-Iran conflict.

This suggests inflation risks remain present but are not escalating uncontrollably for now. However, the prolonged US-Iran conflict raises the chance that higher price pressures become more ingrained in inflation expectations, something the ECB must watch.

Consequently, the central bank is expected to raise interest rates again this month to better prepare for the ongoing inflation struggle. Today's data will not alter that course.