FX.co ★ Euro Area Services PMI Revised Higher

The HCOB Eurozone Services PMI for May 2025 was adjusted upwards to 49.7 from an initial estimate of 48.9, yet it still reflected a slight downturn compared to April's 50.1. This is the first time since November 2024 that the index has dropped below 50, signaling a modest downturn in service sector activity. Demand continued to be weak, with new business declining for the fourth consecutive month, marking the steepest fall in six months. The decline was exacerbated by a sharper reduction in international orders, notably exports. Despite the drop in demand, employment within the sector increased, albeit at the most subdued rate in three months. Work backlogs decreased for the 13th consecutive month, facilitated by the additional workforce. Business sentiment saw a marginal improvement, yet it remains notably low by historical standards. In terms of inflation, both input and output prices remained high, close to the levels seen in April, and above long-term averages, indicating persistent cost pressures in spite of the weaker demand.