Euro Weekly Digest

Europe Economics Date France 21 August 2026 Germany Italy Euro Weekly Digest

Still no clear evidence of broad-based spillover Michael Kirker Week in review Economist n August flash PMIs – Broadly resilient (if a little uneven) growth for the euro area. Data implies the periphery out performed n Q2 labour and wage data – So far no signs of second-round effects n EA final HICP print – Direct energy pressures pushed up inflation. Oil shock spillovers are so far still isolated to a few items closely related to oil. See our chartbook. n CES household inflation expectations – Softened marginally. But most of the sample was collected before the recent increase in oil prices again. For more on expectations, see our dbDataInsights report n ECB speakers – Lane said recent weather events would push up food inflation with a lag, affecting Summer 2027 inflation prints

Week ahead n July money and credit data (Thu) – So far bank lending flows have been resilient, defying the concerns of the Bank Lending Survey. Base effects should support the credit impulse this month n Country-level final Q2 GDP prints (Tue, Fri) – We get the GDP component details for Germany (Tue) and France (Fri). Flash prints from several countries point to strong domestic resilience and net exports. n August preliminary HICP (Fri) – Country-level data starts for the major economies with both France and Spain. n Survey data (Tue, Wed, Fri) – A range of survey data throughout the week. German ifo (Tue) likely to get the most attention n Hard data (Fri) – Spanish retail sales, Italian IP, German unemployment n ECB accounts (Thu) – Insight into how many governors asked themselves if the ECB should have hiked in July rather than wait n French politics (Thu) – The first public debate of presidential candidates

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21 August 2026 Euro Weekly Digest

Week in review August flash PMIs The August PMIs sent a broadly resilient signal for the euro area. The composite PMI rose to 52.1, beating expectations of 51.7, even though Germany and France both underperformed. That implies the rest of the euro area did better, with services outside the two largest economies strengthening enough to offset weakness in France and Germany. At the country level, France was mixed, with a healthier manufacturing print but softer services, consistent with only weak Q3 growth of around 0–0.1%. Germany’s composite was slightly weaker, as a stronger manufacturing sector was offset by services slipping back into contraction.

Manufacturing was the main support. In Germany, manufacturing output and orders rose to their highest levels in four to five years, with export orders also improving and only a slight lengthening in delivery times, suggesting that river transport constraints were not yet a material drag. French manufacturing also improved, with output back above 50 and employment at its highest for a year. Services were the softer part of the report: activity weakened in both France and Germany, with the weakness potentially reflecting temporary weather effects from the heatwaves, and possibly some drag from higher energy costs given services’ more domestic orientation.

Overall, the data point to an economy that is still holding up in the face of the 2026 energy shock. Manufacturing momentum has improved and services remain broadly resilient at the euro area level, even if the weakness in France and Germany warrants watching. Price pressures eased a little in August despite higher energy costs, but output price balances remain high enough to suggest some risk of indirect inflation effects emerging later. For the bigger activity picture, the PMIs are consistent with continued resilience rather than a renewed downturn, though with growth likely uneven across countries and sectors.

Q2 labour market/wages data We had a few pieces of labour market data released this week. The preliminary print of Q2 labour costs showed costs rising 3.1% y/y in Q2, down marginally from 3.2% in Q1. These costs have…