Eurozone PMI in line with continued steady growth despite global unrest
Lead — The Eurozone PMI data released indicates continued steady growth in the region, bolstering the case for resilience despite global uncertainties. Per the full note from ing-think, the composite PMI rose to 52.1 in August, signaling that the eurozone economy remains on a modest growth path. This outcome contrasts many market fears regarding inflation and geopolitical tensions, especially given the backdrop of rising oil prices. Therefore, traders should keep an eye on how these dynamics may influence euro volatility in the coming weeks.
What the desk is arguing
The desk argues that the slight uptick in the Eurozone PMI reflects an economy that's maintaining solid growth, despite looming risks. Per the full note from ing-think, this PMI increase from 52 to 52.1 highlights a continued expansion in economic activity, primarily driven by manufacturing, which saw its PMI rise to its highest level in over four years at 53.4.
Additionally, the services sector showed unexpected resilience, remaining above the critical threshold at 51.7. This data, particularly the softening inflationary pressures despite elevated oil prices, suggests that immediate concerns over core inflation are easing, which bodes well for the eurozone's stability in the near term.
Where it sits in our coverage
Our consensus target for EUR/USD is currently set at 1.075, reflecting a range between 1.04 and 1.12. This target aligns closely with other market forecasts, with notable projections including: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This desk's outlook aligns with jpmorgan's stance, placing it within the upper bound of the forecasted range, suggesting a bullish tilt in light of recent economic data.
How other firms see it
Several firms, like jpmorgan, maintain an optimistic outlook in line with our stance, predicting a stronger euro in the medium term based on solid economic indicators. Conversely, bofa holds a more cautious position, implying potential downward pressures on the euro.
As developments in eurozone economic data unfold, the trajectory of EUR/USD is anticipated to echo broader trends in European monetary policy, particularly the stance of the ECB regarding inflation and interest rates.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Eurozone composite PMI rose to 52.1, indicating steady growth.
- 02Manufacturing PMI hit a four-year high at 53.4, signaling robust activity.
- 03Service sector showed unexpected strength, easing inflation concerns.
Market implications
Traders should monitor the 1.075 level closely, as it aligns with our current consensus target. Should upcoming inflation data or oil price movements significantly shift sentiment, we may see increased volatility in the euro.
Risks to this view
A significant rise in oil prices or renewed geopolitical tensions could undermine the euro's current growth trajectory and prompt a reassessment of economic resilience, potentially leading to downward adjustments in Eurozone forecasts.
Older quick take Quick take Published 09:12 Eurozone PMI in line with continued steady growth despite global unrest The composite PMI remained firm in August, increasing from 52 to 52.1. While downside risks seem to be all around us, the economy remains stubbornly decent for the moment Today’s PMI indicates that the eurozone's third quarter continues to prove decent from a growth perspective Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Bert Colijn Chief Economist, Netherlands The turmoil in the Middle East continues, and so do concerns about the eurozone economy. So far, the impact has been far from devastating, with continued modest economic growth in the first half of 2026.
To paraphrase Nobel Prize winner Robert Solow: you can see geopolitics everywhere but in the eurozone GDP statistics. Today’s PMI indicates that the third quarter continues to be decent from a growth perspective. July and August both came in well above the neutral reading of 50, indicating that the business economy is growing at a steady rate.
The PMI indicated a further acceleration in manufacturing activity, as the manufacturing output PMI increased from 52.9 to 53.4. This is the highest reading in four and a half years. Services had been a source of concern before but remained robust at 51.7.
And despite oil prices above $90 per barrel again, businesses indicate softening inflationary pressures. Both input cost growth and selling price growth eased this month, which takes away some of the more immediate concerns of core inflation quickly moving much higher on the flare-up of the Middle East conflict. So what’s not to like?
Well, clearly, with oil prices above $90 per barrel again and interest rates having repriced higher in recent weeks, the factors slowing growth and pushing up inflation for the months ahead are clear. Then again, the eurozone economy has been quite resilient so far, and momentum remains surprisingly decent. The third quarter seems set for a decent GDP growth print again, firmly ignoring current events.
Inflation GDP Eurozone Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Older quick take
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