Eurozone Services Sentiment Falls to 5-Year Low

The index measuring services confidence in the Euro Area sank to 0.9 points in April of 2026 from 4.1 in the previous month, firmly below market expectations of 3.5 to reflect the least optimistic sentiment since April of 2021. The assessment of business situation fell deeper (-3.4 vs -1.4 in March) and expectations on demand growth sank (3 vs 7.8), consistent with lower purchasing powers from surging energy costs following the outbreak of war in the Middle East. Consequently, expectations on employment (-5.1 vs -0.3) and inflation (17.4 vs 14.9) both worsened.

The index measuring services confidence in the Euro Area inched down by 0.1 point from the previous month to 4.9 in March of 2026, the lowest since October of last year, but ahead of market expectations of 3.9. The result was in line with other leading indicators in the period showing that businesses are less optimistic about the economy following the outbreak of war in the Middle East, which triggered a surge in European energy prices. Still, sentiment gauges have not retreated to the extent feared as attempts to undercut higher borrowing costs raised activity in the near term.

The index measuring services confidence in the Euro Area fell by 1.8 points from the previous month to 5 in February of 2026, firmly below market expectations that it would improve to 7.5, to mark the lowest magnitude of confidence in four months. Firms dimmed their expectations on the evolution of demand in the upcoming three months (9.8 vs 11.1 in January), in line with a moderation in the evolution of employment in the upcoming three months (0.2 vs 1.2). The pullback in expectations matched a deterioration in the evolution of demand in the last three months (5.7 vs 8.8) as the assessment of business situation swung to the negative territory (-0.5 vs 0.5). In turn, selling price expectations eased for a second month (13.9 vs 14.1).