Eurozone Private Sector Contracts Most in 17 Months

The S&P Global Eurozone Composite PMI was revised up to 50.0 in June 2026, from a preliminary 49.5 and above May’s 48.5, marking a stabilization in private sector output after two months of decline. Manufacturing production growth offset a slower but continued drop in services activity. Italy, Spain, and Ireland drove the recovery with sharper expansions in business activity, while Germany and France, though still in contraction, saw their rates of decline ease. New business volumes fell for a fourth month, but the contraction was marginal and the joint-slowest since March. Employment remained virtually unchanged after the steepest drop in five and a half years, and backlogs depleted at a slightly slower pace than in April and May, though still among the fastest of the past year. Input and output costs rose sharply but at a slower rate than recent peaks, while business confidence reached its highest level since the outbreak of war in the Middle East.

The S&P Global Flash Eurozone Composite PMI increased to 49.5 in June 2026 from 48.5 in May, compared to forecasts of 49.1. It is the highest reading in three months, pointing to a smaller contraction in private sector activity. The services drop also eased (47.7 vs 48.9) while manufacturing output growth slowed to a five-month low (51.2 vs 51.3). There was a sustained fall in new orders and a slight drop in employment. Meanwhile, there were signs of inflationary pressures softening, with input costs rising at the slowest pace since the outbreak of war in the Middle East and output charges increasing at the weakest rate in three months. Manufacturers continued to signal sharply lengthened suppliers' delivery times, while the recent spell of rising purchasing activity came to an end. In addition, business confidence ticked up for the second month running.

The S&P Global Eurozone Composite PMI was revised higher to 48.5 in May 2026 from a preliminary of 47.5 and compared to 48.8 in April, signaling the faster contraction in 18 months in private sector activity as inflation weighs. It also marked back-to-back months of contraction for the first time since the end of 2024, with overall activity levels being pulled lower by services (47.7 vs 47.6) while manufacturing continued to rise (51.6 vs 52.2). Weighing on output levels was a further fall in demand for Euro Area goods and services, with export markets a particular drag as non-domestic new orders sank at the quickest rate in five months. Signs of softening were also apparent in the labour market as job losses picked up. As for pricing trends, input cost pressures remained the sharpest seen since late-2022. For a third month in succession, the rate of output price inflation quickened. Positively, there was a modest recovery of business confidence.