IHS Markit’s flash estimates of the purchase manager index across the manufacturing and the services sector showed that business activity continued to expand in August.

The strong numbers came with both Germany and France registering strong output growth during August. Germany’s output showed a faster pace of expansion compared to the month before.

Bundesbank’s report shows strong growth

Earlier this week, the German Bundesbank released its monthly report for Germany. The German central bank said that strong growth trends in the current quarter suggested a continuation to the economic expansion.

“The strong economic upturn in the German economy is expected to continue in the third quarter, with industrial output probably continuing to play an important role, thanks to a substantial expansion in exports,” the Bundesbank said in its report.

The PMI data released last week showed that manufacturing activity outperformed showing the best increase in nearly six and a half years. This comes despite the appreciation in the exchange rate of the euro. The strong performance in the manufacturing sector managed to offset some weakness in the services sector growth.

With the August estimates showing that the pace of momentum continued to increase along with the fact that there was evidence of price pressures, the markets are expecting to see the ECB coming out with the appropriate policy response.

Data showed that the flash manufacturing PMI rose to 57.4 in August, accelerating from 56.6 in July. This was better than the estimates that forecast a decline in manufacturing activity to 56.3.

However, on the flipside, the services sector fell to a 7-month low to 54.9 in August. This was weaker than 55.4 in July and missed estimates of 55.4. Despite dropping to a 7-month low, the rate of expansion in the services sector was seen to be looking strong.

Combined, the Eurozone flash composite PMI rose to 55.8 in August, up from 55.7 in July reaching a two-month high.