Eurozone business activity contracts in May

Pedestrians walk past flags of the European Union outside the European commission headquarters in Brussels, on May 23, 2024. (Photo by Kenzo TRIBOUILLARD / AFP)

BRUSSELS, Belgium — Business activity in the eurozone contracted for the first time in five months in May, weighed down by weakness in the services sector, a closely watched survey showed Thursday.

The HCOB Flash Eurozone purchasing managers’ index (PMI) published by S&P Global registered a figure of 49.5 compared to 50.4 in April.

Any reading above 50 indicates growth, while a figure below 50 shows contraction.

Since the start of the year, the survey has shown very weak growth in the 20-country currency area.

READ: Eurozone economy grows more than expected in Q1 despite US tariff turmoil

The European Commission, the EU’s executive body, this week cut its economic growth forecast for 2025 to 0.9 percent, from a previous prediction of 1.3 percent.

The reduced output in services — 48.9 in May compared with 50.1 in April — stood in contrast with growth in manufacturing output of 51.5 in May, unchanged from April.

On shaky ground

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

But he added: “Do not blame US tariffs for this one” after US President Donald Trump slapped higher levies on steel, aluminum and auto imports.

READ: EU warns US tariffs threaten transatlantic ‘economic stability’

“May’s snapshot is not pretty,” de la Rubia said. “Looking ahead, companies are only cautiously optimistic. The expectations index is still well below its long-term average.”

But he said there were reasons for confidence in the longer term, pointing to a rebound in manufacturing “with encouraging signs coming out of both Germany and France”, more interest rate cuts expected this year and lower oil prices compared to last year.