The eurozone economy stabilised in June after contracting for two consecutive months, according to the latest PMI survey from S&P Global.
Eurozone Business Activity Reaches Three-Month High
The Eurozone Composite Output Index increased from 48.5 in May to 50.0 in June. This was its highest level in three months.
A reading of 50.0 indicates that overall private-sector activity remained unchanged rather than expanding or contracting.
The Services Business Activity Index also improved, rising from 47.7 in May to 49.4 in June. Although the figure remained below the 50.0 growth threshold, the rate of contraction slowed to a marginal pace.
Manufacturing Growth Supports the Economy
Growth in the manufacturing sector helped offset the continued weakness in services. As a result, the broader eurozone economy avoided another month of contraction.
Germany and France, the eurozone’s two largest economies, remained in decline. However, both countries experienced slower rates of contraction compared with May.
Germany’s private-sector output fell only marginally during the month.
Meanwhile, Italy, Spain and Ireland reported stronger expansions in business activity in June.
New Business Continues to Decline
New business volumes fell for the fourth consecutive month. However, the decline was marginal and matched the rate recorded in March, making it the joint-slowest contraction during this period.
New export orders also decreased. Nevertheless, the pace of decline was slower than in the previous month.
Eurozone Employment Stabilises
Private-sector employment was broadly unchanged in June.
This represented an improvement from May, when payroll numbers declined at their fastest rate in five and a half years.
The stabilisation suggests that businesses became less willing to reduce staff as economic conditions improved.
Inflation Pressures Continue to Ease
Input costs increased at their slowest pace since February, bringing cost inflation to a four-month low.
Businesses also raised their selling prices by the smallest amount since March.
The figures suggest that inflationary pressures across the eurozone continued to ease during June.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said service-sector input cost inflation recorded one of its sharpest declines since data collection began in 1998. The only larger falls occurred during the COVID-19 lockdowns in early 2020.
Business Confidence Reaches Four-Month High
Business confidence improved to its highest level in four months.
Expectations for economic growth over the next 12 months also reached their most optimistic level since the outbreak of war in the Middle East.
The survey data were collected between June 11 and June 25, 2026.
