Eurozone business activity stabilises as cost pressures ease

3rd Jul 2026 08:45

(Sharecast News) - Private sector activity across the eurozone stabilised in June, according to the final composite purchasing managers' index released on Friday by S&P Global and the Hamburg Commercial Bank (HCOB), with the downturn in the services sector easing more than initially expected.

The eurozone composite PMI, which tracks business conditions across both the services and manufacturing sectors, rose to 50 points last month - marking no change in activity after two months of declines.

This was up from 48.5 in May and the flash estimate of 49.5 released two weeks ago, and with figures below 50 marking a contraction in activity.

Final estimates for the manufacturing PMI component were already released for June, at 51.4, though the services PMI was revised higher on Friday from the initial 48.9 estimate to 49.4.

Helping stem the decline in activity was a softening in input cost inflation, with costs rising at the lowest rate since February after the Iran war ignited price pressures over recent months.

Private sector payrolls numbers were also more or less steady month on month, following a pickup in job cutting in May, while business confidence hit a four-month high.

"An easing of downturn in eurozone service sector business activity during June is welcome news and, in conjunction with manufacturing growth, means the wider economy has stabilised after two months of falling output," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"A key drag on economic growth since the outbreak of the war in the Middle East has been the subduing of demand from consumers due to the energy price spike, but these inflationary pressures have shown signs of cooling markedly in June."

Williamson said that the easing of cost pressures will reduce the odds of further rate hikes by the European Central Bank in the near term by "tak[ing] some heat out of some of the more hawkish views among ECB policymakers".