Global Data Pod: Western Europe motors on

Western European economic activity remains resilient, with recent PMI data signaling growth near 1.5% despite ongoing energy market volatility and environmental constraints. Germany’s manufacturing sector shows notable improvement, bolstered by defense and infrastructure investments, while services remain stable across the region. Although rising energy prices exert upward pressure on headline inflation, core inflation shows signs of moderation, indicating that indirect price pass-through remains limited. Central banks, including the ECB, Bank of England, and Riksbank, continue to pursue rate hikes to address above-target inflation. However, the future policy trajectory remains sensitive to evolving labor market strength and the potential for persistent price pressures. While the September ECB hike appears certain, subsequent moves depend on whether current growth momentum translates into broader, non-inflationary economic expansion.