Withstanding the impact of U.S. tariffs, the Eurozone PMI expands at the fastest pace in 15 months

According to the Zhitong Finance APP, despite the impact of U.S. tariffs, the private sector in the Eurozone expanded at the fastest pace in 15 months, with manufacturing emerging from a three-year slump. The composite Purchasing Managers' Index (PMI) compiled by S&P Global rose from 50.9 in July to 51.1 in August, further above the 50 mark that separates expansion from contraction. Analysts had previously predicted a figure of 50.6. The services sector showed a slight weakening but still met expectations, while the manufacturing PMI jumped to 50.5, breaking the expectation of a slight slowdown and achieving its first expansion since June 2022. Germany's manufacturing sector is also nearing the end of a three-year downturn. Eurozone PMI rebounds Cyrus de la Rubia, an economist at Hamburg Commercial Bank, stated on Thursday: "The situation is improving. Despite adverse factors such as U.S. tariffs and widespread uncertainty, businesses across the Eurozone seem to be performing quite well." The euro stabilized against the dollar at 1.1654, having previously dipped slightly, while Eurozone bond prices continued to fall, with the yield on Germany's 10-year government bonds rising by 2 basis points to 2.73%. These data further demonstrate the European economy's resilience to various challenges, from trade to war, and will support the views of European Central Bank (ECB) officials who have indicated they are not in a hurry to lower interest rates further. ECB President Christine Lagarde stated on Wednesday that the U.S. imposed a 15% tariff on most EU goods this month, slightly higher than the level predicted by the ECB in June, but "far below" the extreme rates envisioned by the central bank. Even so, Rubia believes that the agreement reached with the Trump administration may impact business activity in the coming months. He emphasized that Eurozone manufacturers' overseas orders have declined for the second consecutive month. He stated: "U.S. trade policy is having an impact. Germany had performed well previously, possibly due to U.S. customers purchasing in advance, but now orders are also declining. France has emerged from the decline in external demand in recent months, but new orders are still decreasing." The economy of the 20 Eurozone countries unexpectedly grew by 0.1% in the second quarter, but this was far below the 0.6% growth rate in the previous three months, which was influenced by a stockpiling frenzy triggered by tariffs. The inflation rate hovers around the ECB's target of 2%. The market generally expects the ECB to maintain the deposit rate at 2% during its September meeting. Previously, the ECB kept rates unchanged at its July meeting, marking the first "hold" after initiating a rate-cutting cycle in June 2024, following eight consecutive rate cuts. Another report released on Thursday showed that the UK's composite PMI rose to 53 in August, better than market expectations. U.S. composite PMI data will also be released later on Thursday, with the market expecting the index to remain above 50