{"id":3626,"date":"2026-05-21T21:01:23","date_gmt":"2026-05-21T21:01:23","guid":{"rendered":"https:\/\/digitalmarkettrends.com\/index.php\/2026\/05\/21\/euro-zone-economy-weakens-further-as-services-demand-and-jobs-decline\/"},"modified":"2026-05-21T21:01:23","modified_gmt":"2026-05-21T21:01:23","slug":"euro-zone-economy-weakens-further-as-services-demand-and-jobs-decline","status":"publish","type":"post","link":"https:\/\/digitalmarkettrends.com\/index.php\/2026\/05\/21\/euro-zone-economy-weakens-further-as-services-demand-and-jobs-decline\/","title":{"rendered":"Euro zone economy weakens further as services demand and jobs decline"},"content":{"rendered":"
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Economic activity in the euro zone contracted at its fastest pace in more than two-and-a-half years in May as rising living costs linked to the ongoing war weighed heavily on demand, particularly in the services sector, according to surveys released on Thursday.<\/p>\n

Data from S&P Global showed the Flash Euro Zone Composite Purchasing Managers’ Index (PMI) fell to 47.5 in May from 48.8 in April.<\/p>\n

A PMI reading below 50.0 indicates a contraction in business activity.<\/p>\n

The latest figures signalled a second consecutive month of decline across the euro zone\u2019s private sector economy.<\/p>\n

Germany and France see worsening business conditions<\/h2>\n

Weakness was seen across the euro area\u2019s major economies.<\/p>\n

Private sector activity in Germany contracted for a second straight month in May, while in France the headline PMI dropped to its lowest level in five-and-a-half years.<\/p>\n

Businesses in France frequently cited fuel and energy cost pressures, along with broader economic uncertainty, as reasons for reduced output.<\/p>\n

Outside the European Union, companies in United Kingdom also experienced their broadest decline in activity in more than a year.<\/p>\n

Firms pointed to the economic fallout from the Iran war and domestic political uncertainty as key challenges.<\/p>\n

Consumer confidence in the euro area also weakened further during the month, according to figures expected later on Thursday.<\/p>\n

Services sector suffers steep decline<\/h2>\n

Demand conditions deteriorated sharply across the euro zone during May.<\/p>\n

New orders across the private sector fell at their fastest pace in 18 months. <\/p>\n

Export demand, including intra-euro zone trade, recorded its steepest decline since January 2025.<\/p>\n

The services sector was hit particularly hard. Services activity contracted at its fastest pace since February 2021, reflecting weakening consumer demand across the bloc.<\/p>\n

The Flash Services PMI dropped to 46.4 in May from 47.6 in April, despite expectations for a modest increase.<\/p>\n

New business in the services industry fell sharply, while manufacturing demand, which had improved in April, returned to contraction territory.<\/p>\n

Meanwhile, the manufacturing PMI eased to 51.4 from 52.2 and remained below market expectations. <\/p>\n

The manufacturing output PMI, which contributes to the composite reading, declined to 51.0 from 52.3.<\/p>\n

S&P Global said some manufacturing data may have been artificially elevated because supply disruptions extended delivery times for factory goods to levels last seen during the COVID-19 pandemic. <\/p>\n

The disruptions were linked to the US-Israeli war with Iran and the closure of the Strait of Hormuz shipping route.<\/p>\n

Inflation pressures intensify <\/h2>\n

The surveys also showed a sharp rise in cost pressures.<\/p>\n

Input price inflation accelerated to a three-and-a-half-year high in May, according to the composite PMI data. <\/p>\n

Prices charged by businesses to customers also rose at their fastest pace in 38 months, though only marginally faster than in April.<\/p>\n

S&P Global warned that the latest price indicators pointed to inflation running close to 4% in the coming months.<\/p>\n

The European Central Bank kept interest rates unchanged last month but debated the possibility of raising rates to combat persistent inflation pressures.<\/p>\n

Policymakers also signalled that a rate increase could be delivered in June.<\/p>\n

ECB policymaker Olli Rehn said in an interview that the central bank may raise interest rates to preserve credibility amid a war-driven increase in fuel costs, although he noted there was limited evidence that high inflation was becoming deeply rooted in the euro zone economy.<\/p>\n

Official data released on Wednesday showed inflation in the euro area remained at 3.0% in April, above the ECB\u2019s 2.0% target.<\/p>\n

Labour market weakens as firms cut jobs<\/h2>\n

The euro zone labour market continued to deteriorate during May.<\/p>\n

Companies reduced headcount for a fifth consecutive month, with the pace of job cuts reaching its steepest level since November 2020. <\/p>\n

Excluding the pandemic period, the decline was the largest since August 2013.<\/p>\n

Services firms reduced staffing levels for the first time since early 2021, while manufacturing companies continued to shrink payrolls.<\/p>\n

Business confidence also weakened significantly. <\/p>\n

Overall sentiment dropped to a 32-month low, while confidence among services firms fell to its weakest level since September 2022.<\/p>\n

<\/p>\n

The post Euro zone economy weakens further as services demand and jobs decline<\/a> appeared first on Invezz<\/a><\/p>\n

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Economic activity in the euro zone contracted at its fastest pace in more than two-and-a-half years in May as rising living costs linked to the ongoing war weighed heavily on demand, particularly in the services sector, according to surveys released on Thursday. Data from S&P Global showed the Flash Euro Zone Composite Purchasing Managers’ Index […]<\/p>\n","protected":false},"author":1,"featured_media":3627,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-3626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"_links":{"self":[{"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/posts\/3626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/comments?post=3626"}],"version-history":[{"count":0,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/posts\/3626\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/media\/3627"}],"wp:attachment":[{"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/media?parent=3626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/categories?post=3626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/digitalmarkettrends.com\/index.php\/wp-json\/wp\/v2\/tags?post=3626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}