Euro Area Services PMI Rises Less than Expected

The HCOB Eurozone Services PMI rose to 51.8 in February 2026 from 51.6 in January, a two-month high, signaling continued but modest expansion in the services sector. Markets were expecting a slightly higher reading of 51.9. Growth was supported by ongoing activity gains, although new business increased at a slower pace, pointing to softer demand momentum. Employment levels were unchanged, ending a five-year streak of job creation as firms paused hiring. Cost pressures eased slightly, with input prices rising at a slower rate than in January, while output price inflation in the services sector also moderated. Despite the softer trends in orders and pricing, service providers remained confident that activity will increase over the next 12 months, though optimism edged slightly lower compared with January.

The HCOB Flash Eurozone Services PMI decreased to 51.9 in January 2026, the lowest in four months, from 52.4 in December and below forecasts of 52.6. The reading signalled a slowdown in services-sector growth, with staffing levels flat after nearly five years of continuous job creation. Meanwhile, charge inflation accelerated to its sharpest pace in 11 months, even as business confidence improved. Services activity in Germany expanded at a fairly robust pace, while in France service companies slipped into contractionary territory. This may be linked to the political difficulties in finalising the 2026 budget.

The HCOB Eurozone Services PMI eased to 52.4 in December 2025, revised lower from an initial estimate of 52.6 and from 53.6 in November, marking the slowest expansion in three months. New business rose at the weakest pace in three months, with gains confined to domestic markets as new export orders fell at the sharpest rate since September 2025. Despite slower order growth, employment expanded at a stronger pace, extending the current hiring streak as firms sought to support capacity and service levels. Outstanding business declined more rapidly, indicating reduced pressure on workloads. On the price front, cost pressures intensified, with input cost inflation accelerating and firms raising selling prices at an above-average pace. Meanwhile, business confidence among service providers weakened to a seven-month low, as concerns over demand conditions and the broader economic outlook weighed on sentiment heading into the new year.