Eurozone: PMI Shows Growth Resilience - Nomura

Nomura's European economics team said in its latest assessment that the Eurozone's August Purchasing Managers' Index (PMI) demonstrated resilience in economic activity, with a strong rebound in manufacturing leading this round of growth, while price pressures that had previously weighed on markets showed signs of easing. This view contrasts with the stagflation risks suggested by some earlier data, indicating that the Eurozone economy retains some support in a complex environment.

**Manufacturing surprises with rebound, services show mixed performance**

Structurally, the improvement in manufacturing stands out. Despite widespread market concerns about continued contraction in the sector, August data showed a clear recovery in manufacturing output, becoming a key driver of the composite PMI. In contrast, services activity remained relatively stable, without a synchronized acceleration in expansion. Nomura's analysis suggests that this "strong manufacturing, steady services" pattern helps alleviate market concerns about a broad slowdown in the Eurozone economy.

**Price pressures ease, policy space may open**

Notably, Nomura specifically highlighted that price pressures have eased. In previous months, the price sub-index in PMI reports had climbed to multi-year highs, triggering market caution about stagflation. If August input costs and output price inflation indeed slowed as Nomura suggests, this would provide the European Central Bank with more flexibility in future policy decisions. However, the euro is currently trading around $1.16832 against the dollar, with markets still digesting the combined impact of economic data and policy expectations.

**Cautious optimism ahead, uncertainties remain**

Despite the positive signals from August's data, Nomura did not offer overly optimistic long-term forecasts. External demand fluctuations, geopolitical factors, and uncertainties in global trade policy remain key downside risks for the Eurozone economy. Overall, this PMI data lays a relatively solid foundation for the Eurozone's third-quarter economic start, but sustainability remains to be verified by subsequent data.