Eurozone business activity contracts in May

May 23, 2025 (MLN): Business activity across the eurozone declined in May for the first time in five months, primarily due to a slowdown in the services sector, according to a closely watched survey released.

The HCOB Flash Eurozone Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 49.5 in May from 50.4 in April. A PMI reading below 50 signals a contraction, while one above 50 indicates expansion.

So far in 2025, the PMI survey has reflected sluggish growth across the 20-nation currency bloc.

Reflecting this trend, the European Commission this week downgraded its 2025 growth forecast for the eurozone to 0.9%, down from the previous 1.3%.

The contraction was driven by a decline in services output, which registered 48.9 in May, down from 50.1 in April.

Meanwhile, manufacturing showed some resilience, with output remaining steady at 51.5, the same as the previous month, as APP reported.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, remarked, "The eurozone economy just cannot seem to find its footing."

He dismissed the impact of recent U.S. tariffs on steel, aluminium, and auto imports, saying, "Do not blame US tariffs for this one."

He described May’s results as discouraging: "May's snapshot is not pretty." He also noted that companies remained cautious, with the expectations index still trailing below its long-term average.

However, de la Rubia highlighted potential for recovery, citing positive signs in Germany and France’s manufacturing sectors, anticipated interest rate cuts later this year, and lower oil prices compared to 2024 as factors that could support long-term optimism.

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