Eurozone Economic Activity Contracts at Fastest Pace in Two and a Half Years

Eurozone economic activity in May contracted at the fastest pace in two and a half years, as the war-induced surge in living costs hit service sector demand and pushed overall input price inflation to a three-and-a-half-year high. According to Jin10, the latest data shows that the Eurozone's composite PMI preliminary reading for May fell from 48.8 to 47.5, marking the lowest level since October 2023 and falling short of market expectations of 48.8. This indicates that private sector activity in the Eurozone has contracted for the second consecutive month. The preliminary PMI for the Eurozone's service sector dropped from 47.6 to 46.4. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated, "The preliminary PMI survey data for May shows that the Middle East war is increasingly damaging the Eurozone economy. The survey data suggests that the Eurozone economy is likely to contract by 0.2% in the second quarter." Williamson added, "The service sector has been particularly hard hit due to the surge in living costs caused by the war, especially the rise in energy prices, which has weakened demand."