LONDON — Euro zone business activity barely expanded in May as the dominant services industry contracted for the first time since November, weighed down by falling demand that has plagued the bloc for a year, a survey showed on Wednesday.
The HCOB Eurozone Composite Purchasing Managers’ Index, compiled by S&P Global, fell to 50.2 in May from 50.4 in April, higher than a preliminary estimate of 49.5 but its weakest since February.
PMI readings above 50.0 indicate growth in activity, while those below point to a contraction.
“The euro zone economy has grown for the fifth month in a row,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, adding that the data required some goodwill as it was only marginally above the expansion threshold.
“This development is due to a slight decline in activity in the service sector, while manufacturing output showed the same moderate growth as in the previous month.”
The services sector saw its business activity index drop to 49.7 from 50.1 in April, signalling a marginal contraction and its first time sub-50 in six months.
Overall new business across the euro zone has declined since June 2024, albeit at a modest rate, and the new business index dipped last month to 49.0 from 49.1. Foreign orders have fallen for more than three years, offering no support to the struggling economy.
Firms continued to work through their backlogs of orders at a moderate and slightly faster rate to compensate for the lack of new work. The services reading fell to 47.4 from 48.1.
Among the bloc’s largest economies, only the southern nations showed expansion. Italy led the way with its fastest growth in more than a year, while Spain’s growth slowed to a 17-month low.
France moved closer to stabilization with its softest decline in nine months, while Germany slipped back into contraction territory.
