Eurozone Economic Activity Contracts as Services PMI Hits 62-Month Low

Key Facts

The Eurozone economy faced a sharp downturn in April as the Composite PMI dropped from 50.7 to 48.8, marking its first contraction in nearly 18 months. This decline was primarily driven by a slump in the services sector, with the Services PMI falling to a 62-month low of 47.6. While manufacturing activity reached a 47-month high of 52.2, it was insufficient to offset the broader private sector weakness. Simultaneously, the ECB Survey of Professional Forecasters raised 2026 HICP inflation expectations to 2.7%, highlighting a growing risk of stagflationary pressure. These figures suggest that the industrial recovery is being undermined by a deteriorating services environment, complicating the ECB's task of balancing growth with long-term price stability amid geopolitical uncertainty.

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