Eurozone manufacturing hits four-year high as Germany surges, Italy contracts

Sweden’s manufacturing PMI rose to 56.1 in August, signaling continued expansion as production and employment boosted activity while orders slowed, keeping the pace above historical norms for the 14th straight month. In the euro area, the manufacturing PMI climbed to 52.7 in August—the fastest expansion in over four years—with Germany spearheading the gains and France contributing, though Italy contracted and Spain remained subdued. German manufacturing saw especially strong new orders and production, driven by demand in sectors like defense and data center construction, while supply chains faced longer delivery times and still-elevated input costs. Across the region, new orders and output improved, export demand recovered for the second time in four-and-a-half years, and optimism rose to above long-run averages, even as inflation pressures cooled only gradually. The euro-area data also showed stabilizing employment and a broad, but uneven, improvement in momentum, with Italy’s contraction highlighting country-level disparities. Overall, August data depict a resilient euro-area manufacturing rebound led by Germany and a bounce in several large members, alongside a still-uneven recovery across member states.