Eurozone manufacturing accelerated sharply in August as German factories rebounded, helping the EUR/USD exchange rate hold above 1.17 despite weakness in services.
Eurozone factory activity strengthened sharply in August, with the manufacturing PMI rising to 52.8 from 51.9 and reaching its highest level in 54 months.
The result comfortably exceeded the 51.8 consensus and was accompanied by faster growth in new orders, while export demand increased for the first time since Russia’s 2022 invasion of Ukraine.
The S&P Global flash PMI data also showed the Eurozone composite index edging up to 52.1 from 52.0, its strongest level since November.
Germany provided the clearest manufacturing surprise. Its factory PMI surged to 54.1 from 52.2, the strongest reading in 51 months, even as the services index fell to 48.5.
The Euro to Dollar (EUR/USD) exchange rate traded around 1.1704 by late morning, up 0.14% on the day after touching 1.1711.
German Manufacturing Recovery Regains Momentum
Phil Smith, Economics Associate Director at S&P Global Market Intelligence, said the German figures showed that “the recovery in the manufacturing sector has regained momentum”.
The strength in factories was partly offset by a continued services downturn, leaving Germany’s composite PMI at 51.0 compared with 51.3 in July.
Even so, employment across the Eurozone improved and manufacturers added staff again after more than three years of reductions, strengthening the case that the industrial cycle is finally turning.
For the Euro, the data provide a more constructive domestic backdrop at a time when Dollar weakness is already lifting EUR/USD.
A sustained move above 1.1710 would strengthen the case for a further advance, while the 1.1650 area remains the first important support if the Dollar stages a recovery.
Our currency coverage draws on live market data, official economic releases and published bank research.
