Euro zone business activity gets boost from Olympics

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STORY: Euro zone business activity showed surprising strength in August despite firms raising prices.

That’s according to the preliminary Purchasing Managers' Index data released on Thursday (August 22).

The results could weaken expectations that the European Central Bank will make two additional rate cuts this year.

The euro zone’s preliminary PMI bounced to a forecast-beating 51.2 from July's 50.2.

Moving it further from 50, the mark which separates contraction from growth.

However the upswing may be temporary.

That’s as the sunnier readings were driven by a surge in the French service sector due to the Olympics, which offset ongoing weakness in manufacturing.

And in Germany, Europe’s largest economy, business contracted for a second consecutive month - and by more than expected.

Even so, the reading beat even the most optimistic of forecasts.

In Britain, outside the European Union, readings were also uplifting.

Business activity accelerated and cost pressures eased to their weakest in more than three years, signaling steady growth momentum going into the second half of 2024.