Eurozone Services Sentiment Improves to 7-Month High

The index measuring service sector confidence in the Eurozone rose to 5.8 in August of 2026 from the upwardly revised 5.1 in the previous month, the highest in seven months, and contrasting with expectations that it would ease to 4.9. The result extended the recovery in business conditions in the currency bloc after the outbreak of war in the Middle East halted energy supply from the region and triggered inflationary pressure that resulted in tighter monetary policy. Improvements were noted in the assessment of business over the last three months (2.4 vs 1.6 in July) and expectations on incoming demand for the next three months (10 vs 9). Meanwhile, selling price expectations rose to 14.1 from 13.7.

The index measuring services sector confidence in the Eurozone rebounded to 3.2 in June of 2026 from 2.6 in the previous month, the highest since March, and slightly ahead of market expectations of 3. Expectations on the evolution of demand improved to 7.3 from 5.4 in May, supported by expectations of softer cost inflation as energy prices fell from their peaks on signs of restored supply from the Middle East. Consistently, selling price expectations dropped 14.1 from 16, and the uncertainty gauge fell to 15.3 from 16.5. The improvement in overall sentiment was supported solely by expectations of a better macroeconomic backdrop, as the evolution of demand (3.0 vs 2.9) and business situation (-0.6 vs -0.6) in the last three months were loosely unchanged.

The index measuring services confidence in the Euro Area rebounded to 2.2 from the upwardly revised, five-year low of 1.4 in the previous month, ahead of the market consensus that it would fall further to 0.2. Still, it was the second lowest reading in the five-year period, underscoring the impact of high energy prices faced by firms due to the halt of oil and gas supply from the Middle East. The current assessment of business situations eased its pessimism (-0.9 vs -2.4 in April), and the expected drop in employment also eased (-1.8 vs -4.9). Still, the evolution of demand worsened (2.6 vs 3.2). Signs energy prices may have already peaked supported the evolution of demand expected in the upcoming three months (4.9 vs 3.4), consistent with a drop in selling price expectations (16.2 vs 17.3).