🇪🇺 Eurozone Finally Decides to Grow, Manufacturing Leads, Services Snooze

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After years of clinging to the economic equivalent of flatlining on a hospital monitor, the eurozone has delivered a rare surprise: its manufacturing PMI jumped into expansion territory for the first time in over three years. Factories from Germany to Italy suddenly remembered what their machines are for, churning out goods like long-forgotten bicycles dusted off from the garage.

The headline figure, released Thursday, showed that new orders picked up, export demand strengthened, and manufacturing leaders even allowed themselves a cautious smile. European policymakers, who have spent the last 36 months blaming “temporary headwinds,” now get to declare that the headwinds might finally be shifting to something resembling a breeze.

But before champagne corks pop across Brussels, there’s a snag: the services sector. Instead of riding manufacturing’s momentum, services PMI stayed stubbornly below 50, meaning that Europe’s restaurants, tourism operators, and financial consultants are still twiddling their thumbs. In other words: Europe can make the widgets, but doesn’t know how to book the hotel rooms to sell them.

Investors greeted the numbers like parents at a toddler’s first piano recital—proud that there was finally a sound resembling music, but painfully aware that it’s still out of tune. The euro climbed modestly, bond yields barely moved, and equity traders shrugged in their usual “call me when there’s a real crisis” fashion.

Meanwhile, the European Central Bank (ECB) is pretending this was all part of the plan. Insiders say policymakers are carefully debating whether to describe the uptick as “resilient recovery” or just “hey, it’s not terrible anymore.” With inflation cooling and unemployment manageable, there’s talk of trimming rates further—but officials are wary of being too celebratory. After all, one bad month of data and the headlines will flip from “green shoots” to “scorched earth” faster than you can say “Eurovision voting scandal.”

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