Euro Area Services PMI Points to Contraction

The S&P Global Eurozone Services PMI eased to 50.2 in March 2026 from 51.9 in February and close to the preliminary 50.1 estimate, marking the weakest performance since May last year. Demand conditions deteriorated, with new business falling for the first time since July 2025 and at the fastest pace in 16 months, while export sales also declined more sharply. Service providers continued to work through backlogs, extending a trend seen since November, and employment levels were broadly unchanged, with hiring activity near a five-year low. Business confidence weakened notably, dropping to a ten-month low amid rising uncertainty. At the same time, cost pressures intensified, with input price inflation accelerating to a 34-month high, although the pace of increase in prices charged slowed slightly compared to February.

The S&P Global Flash Eurozone Services PMI fell to 50.1 in March 2026 from 51.9 in February, below forecasts of 51.1. The reading pointed to near-stalling growth in the services sector, the weakest since a contraction in May last year. There was a renewed reduction in new orders, alongside a marked increase in price pressures due to the war in the Middle East. Meanwhile, services employment increased marginally, but to the smallest extent since last September.

The HCOB Eurozone Services PMI inched higher to 51.9 in February of 2026 from 51.6 in the previous month, slightly ahead of the preliminary estimate of 51.8 and in line with the initial market expectations. New orders for companies in the sector improved at a faster pace, although strong demand was solely due to favorable domestic dynamics as export orders fell further, extending the streak that began in June of 2023. Likewise, service providers continued to clear backlogs to sustain output levels, although the pace of depletion slowed to its slowest in three months. In the meantime, firms continued their net hiring pace to stretch the current trend of job creation to five years. On the price front, input cost inflation was unchanged from the prior month's 11-month high, but output charges slowed. Still, the pickup in orders was enough to carry an improvement in business confidence for the upcoming 12 months.