Eurozone services contraction eases in June as cost pressures cool

• Services PMI 49.4 vs 48.9 prelim
• Prior 47.7
• Composite PMI 50.0 vs 49.5 prelim
• Prior 48.5

Both the services and composite prints are 3-month highs respectively, reflecting a modest recovery in business activity in the euro area to wrap up Q2 2026. New business volume may have fallen for a fourth successive month, but at least the contraction was marginal and the joint-slowest seen over this period (matching March).

Alongside some stabilisation in the manufacturing sector, it signals that the wider Eurozone economy has stabilised after two months of falling output.

S&P Global notes that:

"Helping to lift the eurozone economy out of its downturn were sharper expansions in business activity in Italy, Spain and Ireland. While the currency bloc's two largest nations - Germany and France - remained in contraction, rates of decline eased from May. In fact, the reduction in German private sector output was only marginal.

There was a further improvement in business confidence across the Eurozone in June, taking it further above April's recent low. In fact, growth expectations for the coming 12 months were their most optimistic since the outbreak of war in the Middle East.

A marked easing of inflation rates since May was a key finding from the latest PMI survey data. Although input prices rose sharply and at a pace that was above the historical trend, the rate of increase was the softest in four months. Output charges were subsequently raised by the smallest margin since March."

This article was written by Justin Low at investinglive.com.