Eurozone August PMI unexpectedly strong, with manufacturing in both France and Germany exceeding expectations; services price index continues to decline but remains above the expansion-contraction threshold

(1) The preliminary Eurozone Purchasing Managers’ Index (PMI) for August has released multiple unexpected signals, with manufacturing showing robust strength. Both Germany and France’s manufacturing readings exceeded expectations, acting as the primary engines driving the overall index higher. (2) Although the services data from Germany and France fell short of expectations, the overall Eurozone services PMI still delivered a better-than-expected performance, indicating that growth momentum is coming more from member states outside the two major economies. (3) On the price front, marginal positive signals emerged as both input and output price PMIs continued to decline. Despite current fuel prices remaining elevated, these two indicators are still above the 50 threshold, suggesting that inflationary pressure has eased somewhat but is not yet fully alleviated. (4) Regarding the September policy meeting, the current data has not altered the basic assessment that rate hikes remain an option on the table. The market has almost fully priced in this scenario, while the outlook for the December meeting remains highly uncertain, with current market pricing reflecting roughly equal probabilities for either a rate hike or holding steady.