Euro Zone PMI Falls to 48.5, Signaling 0.2% Q2 GDP Contraction

3 articles · Updated · Reuters · Jun 3

Euro zone private sector activity shrank for a second straight month in May, with the composite PMI slipping to an 18-month low of 48.5 and S&P Global pointing to a 0.2% quarterly GDP decline.
Waning demand drove the downturn: total new orders fell for a third month, export orders dropped at their fastest pace this year, and services improved only slightly to 47.7—still below the 50 mark that signals growth.
Germany and France led the deterioration, while Italy and Spain managed only marginal expansions; firms also reported the fastest job shedding in 5-1/2 years, though layoffs remained mild.
Input costs rose at their sharpest pace in 3-1/2 years and prices charged hit a 38-month high after May inflation accelerated to 3.2%, as the Middle East war pushed up fuel prices.
That mix of weaker growth and hotter inflation complicates the ECB's June meeting, where economists are split over whether it will raise its benchmark rate by 25 basis points to 2.25%.

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Reuters1d ago

Euro zone private sector activity shrinks in May; PMI at 18-month low, signaling Q2 GDP contraction

economyglobal.com13h ago

Eurozone's May Composite PMI falls to 48.5 as shrinking demand, inflation signal 0.2 percent Q2 GDP contraction - Economy Global

cryptorank.io1d ago

Euro zone economy weakens further as services demand and jobs decline

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Stagflation Looms Over Eurozone: Inflation, Energy Shock, and Policy Dilemmas in 2026-2027

Overview

In May 2026, the Eurozone economy faced a deepening downturn as business activity struggled and price pressures surged to their highest in over three years. This was mainly driven by an ongoing energy shock, which intensified inflationary pressures and pushed inflation close to 4%. The negative business sentiment and contractionary trends in key indicators reflected growing concerns among businesses and policymakers. The energy shock, linked to geopolitical tensions, not only raised operational costs but also diverted focus from long-term reforms. As a result, the Eurozone entered a challenging period marked by persistent inflation, weak growth, and heightened uncertainty about the future.

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