Manufacturing activity in Germany fell at a slower pace in August, with the PMI reading advancing to 49.0 from 45.7 in the previous month, while service-based activity expanded for the first time since in nearly a year. The services PMI reading jumped to 54.1 from 48.1 in July, topping expectations for a rise to 48.6, and the data encourages an enhanced outlook for Europe’s largest economy as policymakers anticipate economic activity to improve throughout the second-half of the year. At the same time, the manufacturing PMI reading to the Euro-Zone rose to 47.9 in August from 46.3, while the services PMI increased to 49.5 from 45.7 in the previous month to beat forecasts for a rise to 46.5. As a result, the PMI composite rose to 50.0 from 47.0 to expand for the first time since May 2008. As growth prospects improve, the European Central Bank is likely to hold a neutral policy stance going forward, and the rise in the interest rate outlook may continue to support the rally in the euro as investors speculate the ECB to raise borrowing costs over the next 12 months.
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