Eurozone Services Activity Revised Higher

The S&P Global Eurozone Services PMI inched higher to 47.7 in May of 2026 from the five-year low of 47.6 in the previous month, revised sharply higher from the preliminary estimate of 46.4 to align with the earlier market expectations. New business inflows continued to decline, consistent with the lower purchasing power for clients since the outbreak of war in the Middle East triggered a surge in energy costs. Despite the sharp increase in input costs, output charges rose at a softer pace. Consequently, firms tapped their backlogs to soften the drop in output. The lower need for capacity drove employment levels in the services sector to drop for the first time since January of 2021. Looking ahead, business confidence improved slightly from the previous month but remained below historical averages.

The S&P Global Eurozone Services PMI fell to 46.4 in May 2026 from 47.6 in April, below forecasts of 47.7, preliminary estimates showed. The reading pointed to the largest contraction in services sector activity since early 2021, with business activity decreasing solidly and new export orders also falling. In addition, price pressures remained elevated due to disruptions caused by the war in the Middle East and there was the first scaling back of workforce numbers since the start of 2021. In addition, service providers were at their least confident since September 2022.

The S&P Global Eurozone Services PMI was revised up slightly to 47.6 in April 2026 from 47.4, but still fell from 50.2 in March, marking its first move into contraction in nearly a year and the sharpest decline in activity since February 2021. Demand weakened further, with new orders falling at the fastest pace since October 2023, partly due to a drop in export business. Employment was broadly unchanged for a second consecutive month, a notable shift from the strong hiring trend seen in previous years. Backlogs were reduced at the quickest pace since March 2025, suggesting firms are working through existing orders. Meanwhile, cost pressures intensified, with input and output price inflation rising to multi-year highs. Business confidence also deteriorated, dropping to its lowest level in 42 months.