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Euro zone business activity has grown at its fastest pace this year in August, buoyed by stronger new orders — particularly in manufacturing — and a return to export growth, according to a survey which also showed easing price pressures.

That suggests the economy has remained resilient this quarter despite the Middle East conflict, after expanding 0.4% in the second quarter.

The S&P Global Flash Euro zone Composite PMI Output Index has risen to 52.1 this month from July's 52.0, its highest since November and above a Reuters poll expectation of 51.7. Readings above 50 indicate growth.

Final data have come out better than initial flash readings for the past five months.

New orders, a key gauge of demand, have risen at their fastest rate in 40 months, while ⁠export orders, including intra-euro ⁠zone trade, have increased for the first time since Russia invaded Ukraine in February 2022.

“The manufacturing sector is again the star performer ... with the services economy providing a supporting role, notching up another month of decent growth after the malaise seen in the second quarter," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"We are again seeing reports of precautionary stock building helping support ⁠the goods-producing sector amid the ongoing supply chain disruptions emanating out of the Middle East ... However, there are also encouraging signs of rising demand for AI-related tech goods and rising equipment demand thanks to higher defense spending, notably helping Germany in particular achieve increasingly impressive production gains."