Eurozone Services Activity Revised Higher

The S&P Global Eurozone Services PMI rose to 51.7 in July of 2026 from 49.4 in June, the highest in five months, revised marginally higher from the flash estimate of 51.6 and well above the initial estimate consensus of 49.8. The result reflected improving economic conditions as the momentary truce between the US and Iran lowered energy prices and improved margins for the European services sector. New business wins rebounded in the period, even though most new contracts were with domestic clients, while backlogs were depleted. Consequently, higher capacity demand supported a mild increase in employment levels. Meanwhile, input cost inflation fell the most since February, leading to a similar slowdown in output charges. Looking ahead, Eurozone services providers displayed greater optimism on the year ahead.

The S&P Global Eurozone Services PMI rose to 51.6 in July 2026 from 49.4 in June, marking a five-month high and comfortably exceeding market expectations of 49.8, flash data showed. The reading signaled a return to expansion in the services sector after a three-month contraction, supported by a renewed increase in business activity. Employment also improved, with service providers driving overall job creation across the private sector. On the cost front, operating expenses continued to rise at a pace broadly unchanged from the previous month, reflecting persistent input cost pressures. However, output price inflation eased, indicating that firms were passing on costs to customers at a slower rate. Business confidence also strengthened, with sentiment regarding the year-ahead outlook improving across the services sector as companies grew more optimistic about future demand and economic conditions.

The Eurozone Services PMI Business Activity Index rose to 49.4 in June of 2026 from 47.7 in the previous month, revised higher from the preliminary estimate of 48.9 and well above the earlier market expectations of 48.5. It was the softest downturn in the bloc's services sector activity since the outbreak of war in the Middle East triggered an energy shock for European importers. New business volumes fell at a slightly faster pace than the previous month. Consequently, companies cleared backlogs of work at an accelerated take for output. Despite the pullback in demand from clients, firms recorded a fresh increase in their headcounts after the brief pullback in the second quarter. The hiring was in line with an improvement in business sentiment as energy prices fell from their peaks and reduced the surge in borrowing costs. Input inflation faced by the sector fell for the first time since October of last year.