Eurozone manufacturing growth hits four-and-a-half year high in August

1st Sep 2026 15:01

(Sharecast News) - Growth in the eurozone manufacturing sector hit a four-and-a-half year high in August, according to a survey released on Tuesday.

The S&P Global manufacturing purchasing managers' index rose to 52.7 from 51.9 in July. This marked the highest level since May 2022 and was above the 50.0 mark that separates contraction from expansion.

Factory output and incoming new order volumes both rose at their quickest rates since early-2022, supporting renewed purchasing activity growth and a pick-up in business confidence, S&P said. Inflation also continued its downward path, although rates of increase in both input costs and output prices were still above those seen immediately prior to the conflict in the Middle East.

Joe Hayes, senior principal economist at S&P Global Market Intelligence, said: "The August PMI report provided the clearest signs yet that the eurozone's industrial economy has so far shaken off both the oil price shock and supply-related disruptions caused by the Middle East war. Stronger order book growth, in part owing to a recovery in export demand, should give this expansion legs.

"Breaking the PMI data down by the three main industrial groupings revealed the intermediate goods sub-sector as the main contributor of manufacturing growth. This includes critical industries such as chemicals and metals, as well as electrical equipment and electronic components, suggesting the euro area can also be a beneficiary from the tech supercycle, even if it's arriving late to the party.

"A further softening of producer price increases, even in the midst of sustained oil market volatility, helps to alleviate broader inflation worries. That said, the pace of disinflation is starting to level off and the PMI's price metrics remain well above their pre-war levels, which may just embolden a cautious stance by eurozone monetary policymakers."

Separately, preliminary figures from Eurostat showed that headline inflation in the eurozone rose to 3.3% in August from 2.9% in July, hitting its highest level since September 2024.

Energy inflation rose to 14.3% from 10.3%, while services inflation dipped to 3% from 3.3%.

Core inflation - which excludes energy, food, alcohol and tobacco - nudged down to 2.4% in August from 2.5% a month earlier.

ING economist Bert Colijn said: "For the European Central Bank, the jump in the headline inflation rate makes a September hike easier to sell. But the stubbornly benign core inflation rate should make for an interesting debate about a possible subsequent hike into restrictive territory."