FX.co ★ Eurozone Services Sector Slips Into Contraction

The HCOB Eurozone Services PMI decreased to 48.9 in May 2025, down from 50.1 in April, falling short of market expectations of 50.3, as per preliminary estimates. This reading indicates a return to contraction in the services sector, the first occurrence since the previous November, and marks the most significant downturn since January 2024. The renewed fragility is attributed to a decline in activity and a continuous four-month streak of dwindling new business. Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, remarked that although foreign demand for services showed signs of softening, it was the sluggish domestic demand that had a more substantial impact on the sector. Regarding pricing, input cost inflation experienced a slight increase compared to April. On the upside, there was a modest rise in employment levels. Nonetheless, business confidence fell to its lowest point since September 2022.