London, UK – An economic survey showed that private sector activity in the eurozone contracted in May at its fastest pace in 18 months.
This came amid declining demand for goods and services and rising inflationary pressures
to their highest level in more than three years. This reflects a deterioration in key economic indicators.
A broad decline in economic activity
According to Reuters, the S&P Global Eurozone Composite Purchasing Managers’ Index (PMI) fell to 48.5 in May, down from 48.8 in April.
This is the lowest level since November 2024, although it was higher than the initial estimate of 47.5.
The data showed that weak demand led to a decline in output for the second consecutive month.
Indicating continued pressure on the European economy, the services sector remained
in contraction territory despite a slight improvement to 47.7, compared to 47.6 in the previous month.
Inflation and expectations of a GDP contraction
The data recorded a noticeable increase in price pressures, reaching their highest levels in more than three years.
This came in light of the effects of war, energy costs, and supply chains, which further complicate the economic landscape in the region.
Estimates issued by S&P Global indicated that these indicators suggest a contraction in the Eurozone’s GDP by 0.2% during the second quarter of this year.
This is in the event that current trends continue without a significant improvement in demand or stability in prices.
These data reflect the continuing pressures facing the European economy in light of
an unstable global environment. In addition, the challenges associated with inflation and weak growth are increasing.
