The Eurozone services sector showed continued contraction in June but at a slower pace, according to S&P Global's latest Purchasing Managers' Index (PMI) data. The services PMI final reading reached 49.4, up from May's 47.7 and the preliminary estimate of 48.9, while remaining below the 50.0 expansion threshold. The slowdown in contraction was driven by a significant easing in input cost pressures, which decelerated at the fastest rate since 1998 excluding the 2020 pandemic period. The Eurozone composite PMI rose to 50.0 in June, marking the first return to expansion territory since March as manufacturing growth offset persistent services sector weakness.
Eurozone Services PMI Records Slower Contraction in June
S&P Global reported the Eurozone services PMI final reading for June at 49.4, remaining below the 50.0 threshold that separates contraction from expansion. The figure exceeded both May's 47.7 and the preliminary estimate of 48.9. The composite PMI for June stood at 50.0, compared to May's 48.5, representing the first time since March that the index moved above the contraction baseline.
Input Cost Inflation Decelerates to Four-Month Low
Input cost inflation in the services sector slowed for the first time since October of the previous year, reaching a four-month low. The deceleration in cost pressures, influenced by factors including declining oil prices, represented the steepest pace since 1998 excluding the 2020 pandemic period, according to statistics compiled since 1998.
Germany Services Sector Continues Third Month of Contraction
Germany's services PMI for June reached 48.6, marking the third consecutive month of contraction. The reading exceeded both May's 48.1 and the preliminary estimate of 46.8. The June figure represented the highest level since the sector entered contraction in April, indicating a relatively moderate pace of decline. Demand weakness driven by high prices and weakening market confidence continued to pressure the services sector. Germany's composite PMI rose slightly to 49.5 in June from May's 48.8.
S&P Global Economist Assesses Economic Stabilization
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated that the easing contraction in Eurozone services activity in June was welcome news. Williamson noted that when viewed alongside manufacturing growth, the data indicated that the broader Eurozone economy, which had experienced production declines for two months, had now regained stability.
FAQ
What was the Eurozone services PMI reading for June?
The Eurozone services PMI final reading for June was 49.4, up from May's 47.7 and above the preliminary estimate of 48.9, though still below the 50.0 expansion threshold.
Why did the Eurozone services sector contraction slow in June?
The slowdown in contraction was driven by a significant easing in input cost pressures, which decelerated at the fastest rate since 1998 excluding the 2020 pandemic period, influenced by factors including declining oil prices.
What did Germany's June services PMI indicate?
Germany's services PMI reached 48.6 in June, marking the third consecutive month of contraction but representing the highest level since April, indicating a relatively moderate pace of decline despite continued demand weakness from high prices and weakening market confidence.
