Euro Zone Business Growth Stagnates Amid Service Sector Woes

The euro zone's business activity barely expanded in May, largely due to a contraction in the services industry for the first time since November, according to a survey released Wednesday. The HCOB Eurozone Composite PMI, compiled by S&P Global, decreased to 50.2 in May from April's 50.4, exceeding the previous estimate of 49.5 but marking its weakest point since February.

PMI readings above 50.0 indicate growth, while numbers below signal contraction. "The euro zone economy has grown for the fifth consecutive month," noted Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, suggesting that the marginal data requires some optimism as it's barely above the growth threshold.

The slight decline in activity in the service sector offset moderate growth in manufacturing output, causing the services index to fall to 49.7 from April's 50.1, marking its first contraction in six months. Current trends show a decreasing rate in overall new business since June 2024, and foreign orders continue to slide, offering no respite for the economy.

(With inputs from agencies.)