Economic Buzz: Eurozone private sector activity contracts as services PMI stays weak

Private sector activity in the eurozone fell at the sharpest pace in 18 months during May, according to S&P Global PMI data. The Composite PMI Output Index slipped further into contraction, easing from 48.8 in April to 48.5, marking back-to-back declines for the first time since late 2024.

The downturn was driven mainly by services, with the Eurozone Services PMI Business Activity Index posting 47.7 in May, up slightly from April?s 47.6 but still below the 50.0 threshold that signals growth. This marked the third consecutive month of falling demand for services. Manufacturing output rose modestly, but not enough to offset the services weakness.

Germany and France led the contraction, while Italy and Spain managed marginal growth. New orders fell for the third month in a row, with exports dropping at the fastest pace this year. Job losses accelerated, hitting the sharpest rate in over five years, though still mild overall.

Inflationary pressures intensified, with input costs rising at the fastest pace in three-and-a-half years and output prices climbing to a 38-month high. Business confidence improved slightly from April?s low but remained subdued compared to historical levels.

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