Brussels (Brussels Morning Newspaper) – The euro zone’s leading services sector saw growth resume in June following a short contraction in May, although the growth remained modest due to weak demand despite improving business confidence, according to a survey released on Thursday.
The HCOB Eurozone Services PMI, compiled by S&P Global, increased to 50.5 in June from 49.7 in May, beating the initial estimate of 50.0. PMI readings above 50 suggest economic growth, whereas those below indicate a slowdown.
“This marks a prolonged period of relatively weak growth, and one which has never been surpassed in length over the course of the PMI’s 27 years of data,”
Stated Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
What is driving the modest recovery in services?
The composite PMI, covering manufacturing and services, rose slightly to 50.6 in June from 50.2, reaching a three-month peak but still reflecting modest growth. The preliminary estimate was 50.2.
Overall, new business fell for the 13th consecutive month, with the composite index indicating a slight easing in contraction to 49.7. Despite this decline, services firms kept hiring for the fourth month in a row, preserving a nearly 4-1/2-year-long job creation streak.
Which countries led the euro zone services rebound?
Ireland continued to top the growth rankings among the euro zone‘s main economies for the fourth consecutive month, although its growth rate slowed to the lowest since January. Spain surpassed Italy to take second place, while Germany resumed growth. France was the only major economy still contracting, marking its tenth consecutive month of decline.
Business confidence among service providers rose to its highest point in 2025, rebounding from April’s 29-month low, but it still stayed below the long-term trend.
What are the ECB’s concerns about price inflation?
Input price inflation in the services sector slowed to a seven-month low but stayed relatively high, while charges increased at the fastest pace in three months. This could complicate the ECB’s inflation outlook despite recent rate cuts.
“The European Central Bank is unlikely to be entirely happy that sales prices in the services sector rose more strongly in June and that input prices are also rising sharply,”
De la Rubia added.
