"The fact that the euro zone PMI has not fallen in the two months following the U.K.'s Brexit vote will be welcome news for policymakers. But growth remains too sluggish to push core inflation back to the ECB's target," Stephen Brown, European economist at Capital Economics, said in a report published after the PMI data.
With that in mind, Capital Economics reiterated its forecast that the ECB will increase monetary support after the next policy meeting in September. It sees the central bank increasing its asset-purchasing program to 90 billion euros ($102 billion) from 80 billion euro per month and extending the program by six months to September 2017.
German private sector activity slowed to a two-month low of 54.4 in August, down from 55.3 in July, according to the Markit index on Tuesday. Readings over 50 signal economic expansion, but the declining numbers suggest growth is slowing.
"Output, new orders and employment all rose at slightly weaker rates during the month, thereby signalling that business conditions have become a bit more challenging since the prior month," Oliver Kolodseike, economist at IHS Markit, said in a report on Tuesday.
Meanwhile, French private sector output hit a 10-month high in August, with the Markit flash French composite output index at 51.6.