Eurozone Economy: Growth at a Snail's Pace Amid Mixed Signals

The euro zone's economic growth remained sluggish in August, marked by slow services growth offset by better manufacturing output. New orders rose for the first time since May last year, driven by domestic demand, while export orders fell. Political tensions and trade uncertainties continue to pose risks.

The euro zone economy experienced minimal growth in August, as weaker services expansion was counterbalanced by improved manufacturing output, according to a recent survey. The HCOB Eurozone Composite Purchasing Managers' Index (PMI), a key economic indicator, marginally rose to 51.0, signaling modest growth after the 50.0 threshold separating growth from contraction was crossed.

For the first time since last year, new orders increased slightly, fueled by domestic demand despite export orders declining at their fastest rate since March. Spain led the major euro zone economies, while Italy slightly accelerated, and Germany slowed. France, though still in contraction, saw its PMI reach a high of 49.8.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, warns of the risks due to the slow growth, citing political tensions, trade uncertainties, and challenges in the automotive sector. Services growth weakened, but manufacturing showed significant increases, and employment saw its highest rise in 14 months. However, rising input costs and price pressures could complicate the European Central Bank's inflation targets, with business confidence remaining low.

(With inputs from agencies.)