Developed market PMIs rose in August, driven by services, while European manufacturing employment improved markedly

Overview

The report tracks August flash PMIs for developed markets, including the United States, Euro Area, United Kingdom, Australia, and Japan. Its core conclusion is that current activity improved overall, driven mainly by services, while European manufacturing employment performed particularly well. At the same time, forward-looking indicators weakened slightly, delivery times remained elevated, and price PMIs declined but stayed at relatively high levels.

Core views

Current activity across developed markets expanded further in August. The GDP-weighted developed market flash composite PMI rose 0.8 point to 54.1, with the services PMI up 1.2 points to 54.1 and the manufacturing PMI unchanged at 53.2. This indicates that the improvement in overall business conditions this month came primarily from services rather than a simultaneous acceleration in manufacturing. Performance diverged significantly across countries and regions. The Euro Area flash manufacturing PMI rose 0.9 point to 52.8, and the report also highlighted a marked improvement in European manufacturing employment in August. In contrast, the U.S. flash manufacturing PMI declined 0.7 point to 53.2. In services, the U.S. PMI rose 2.2 points to 56.8, while Australia's fell 0.6 point to 51.9. Early U.S. business surveys provided mixed to moderately positive signals for manufacturing activity and mixed signals for services activity, confirming that the strengthening was not broad-based or synchronized across economies and sectors. The improvement in current activity did not translate into stronger forward-looking momentum. The developed market manufacturing new orders-to-inventories ratio declined 0.01 to 1.10, while the services future activity indicator fell 0.4 point to 61.5. Early U.S. surveys provided positive signals for future manufacturing activity but neutral to negative signals for future services activity. The report therefore presents a combination of continued current expansion and slightly cooling future momentum, rather than a one-way trend of sustained acceleration. Employment indicators also diverged across regions. European manufacturing employment improved markedly in August; the U.S. flash composite employment PMI rose 2.1 points to 53.0, and most other early U.S. business surveys provided positive employment signals. Australia's flash composite employment PMI, however, fell 0.9 point to 51.4. The employment data thus support resilience in parts of the United States and Europe, but Australia's performance shows that the improvement was not universal. Supply-chain indicators continued to show elevated delivery times. Manufacturing supplier delivery times in major developed markets remained high in August, while the developed market average indicator fell 0.1 point to 42.1. Early U.S. business surveys also continued to point to above-average supplier delivery times. This suggests that supply-chain timeliness has not yet fully normalized and remains an important contextual factor when interpreting manufacturing conditions. Price-related indicators declined across the board. The developed market manufacturing input price PMI fell 1.5 points to 66.4, while the services input price PMI declined 1.6 points to 61.1. The manufacturing output price PMI fell 1.2 points to 58.3, and the services output price PMI declined 1.5 points to 54.9. In specific markets, the U.K. manufacturing output price PMI fell 3.7 points to 57.8, while Australia's services output price PMI declined 3.8 points to 53.3. Price PMIs remained above 50, but their declines this month indicate a marginal slowdown in price growth momentum. The report also noted that, even as European activity strengthened, price pressures varied across regions.

Analysis framework

The report first uses GDP-weighted PMI results for the United States, Euro Area, United Kingdom, Australia, and Japan to assess overall developed market conditions. It then divides the composite measure into manufacturing and services and compares the major economies. Next, it examines forward-looking activity, employment, supplier delivery times, and input and output price components in sequence, while using early U.S. business surveys to cross-check the signals from the flash PMIs.

Methodology notes

• Macroeconomic framework

  GDP-weighted aggregation of developed market PMIs

  The report aggregates PMIs for the United States, Euro Area, United Kingdom, Australia, and Japan based on each economy's GDP weight, enabling the overall indicator to better reflect their relative sizes within developed markets.

• Cycle and Business Conditions FrameworkBusiness Cycle Turning Point Analysis

  Using the manufacturing new orders-to-inventories ratio and the services future activity indicator to assess forward-looking momentum

  The report examines not only current PMIs but also changes in orders relative to inventories and businesses' expectations for future services activity to assess whether the current expansion is likely to continue accelerating.

• Macroeconomic framework

  Cross-validation of PMI components with early business surveys

  The report separately examines activity, employment, delivery-time, and price components and combines them with other early U.S. business surveys to test whether the signal from a single flash PMI is supported by a broader range of data.

Key data

• Developed market flash composite PMI54.1Up 0.8 point in August
• Developed market flash services PMI54.1Up 1.2 points in August
• Developed market flash manufacturing PMI53.2Unchanged in August
• Euro Area flash manufacturing PMI52.8Up 0.9 point in August
• U.S. flash manufacturing PMI53.2Down 0.7 point in August
• U.S. flash services PMI56.8Up 2.2 points in August
• Australia flash services PMI51.9Down 0.6 point in August
• Manufacturing new orders-to-inventories ratio1.10Down 0.01 in August
• Services future activity indicator61.5Down 0.4 point in August
• U.S. flash composite employment PMI53.0Up 2.1 points in August
• Australia flash composite employment PMI51.4Down 0.9 point in August
• Developed market supplier delivery times indicator42.1Down 0.1 point in August, with delivery times remaining elevated
• Developed market manufacturing input price PMI66.4Down 1.5 points in August
• Developed market services input price PMI61.1Down 1.6 points in August
• Developed market manufacturing output price PMI58.3Down 1.2 points in August
• Developed market services output price PMI54.9Down 1.5 points in August
• U.K. manufacturing output price PMI57.8Down 3.7 points in August
• Australia services output price PMI53.3Down 3.8 points in August

Impact & implications

The report's data combination indicates that developed markets remained in expansion in August, with services serving as the main source of the overall improvement. European manufacturing employment and U.S. employment and services data demonstrate pockets of resilience. However, simultaneous declines in the manufacturing new orders-to-inventories ratio and the services future activity indicator suggest that the current improvement has not yet developed into a broad-based acceleration. The widespread declines in input and output price PMIs indicate a marginal easing in price growth momentum, although the relevant indices remain at elevated levels and supplier delivery times continue to be high.