Eurozone Business Activity Shrinks in May – PMI Data Shows
Preliminary PMI surveys for May revealed that business activity in the eurozone unexpectedly fell back into contraction territory, raising concerns about the region’s economic momentum.
The services sector, which dominates the bloc’s economy, saw a sharp decline, with the Services PMI dropping to 48.9 from 50.1 in April — its lowest level in 16 months and well below the 50.7 forecast.
On a more positive note, the Manufacturing PMI inched up to 49.4 from April’s 49.0, slightly beating expectations of 49.2. While still below the 50 mark that separates growth from contraction, the modest improvement offers a glimmer of hope for the struggling sector.
The Composite PMI — which combines both services and manufacturing activity and is widely regarded as a key growth indicator — fell to 49.5 in May, down from 50.4 in April and under the 50.7 forecast. This marks the first time in 2024 that the index has dipped below the 50 threshold, signaling a potential turning point in the bloc’s recovery.
Despite the downturn, economists remain cautiously optimistic, citing encouraging signs of stabilization in the manufacturing sectors of Germany and France, the eurozone’s two largest economies.
