Published by Global Banking & Finance Review®
Posted on July 3, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe euro zone services sector grew modestly in June, with PMI rising to 50.5, indicating improved business confidence despite weak demand.
LONDON (Reuters) -Growth in the euro zone's dominant services industry resumed in June after a brief contraction in May, though the pace remained marginal as demand remained weak despite improving business confidence, a survey showed on Thursday.
The HCOB Eurozone Services Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 50.5 in June from 49.7 in May, above the preliminary estimate of 50.0.
PMI readings above 50 indicate growth in activity, while those below point to a contraction.
"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," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
The composite PMI, which includes manufacturing and services, edged up to 50.6 in June from 50.2, marking a three-month high but still indicating only modest growth. The flash estimate was 50.2.
Overall new business declined for the 13th consecutive month, the composite index showed, though the rate of contraction eased to just fractional levels at 49.7. Despite this, services companies continued hiring for the fourth straight month, maintaining the job creation streak that has lasted nearly 4-1/2 years.
Among the euro zone's major economies, Ireland led the growth rankings for the fourth consecutive month, though its pace slowed to the weakest since January. Spain overtook Italy for second place while Germany returned to expansionary territory. France remained the only major economy in contraction, declining for the tenth straight month.
Business confidence among service providers improved to the highest level so far in 2025, recovering further from April's 29-month low, though it remained below the long-run trend.
Input price inflation in the services sector eased to a seven-month low but remained relatively high while charges were raised at the fastest rate in three months, potentially complicating 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.
Following a year-long interest rate-cutting campaign the ECB will make one more reduction in September, according to a slight majority of economists in a Reuters poll published last week.
(Reporting by Jonathan Cable)
The PMI reading rose to 50.5 in June, indicating a return to growth in the services sector after a contraction in May.
The euro zone has experienced a prolonged period of relatively weak growth, the longest in the PMI's 27 years of data.
Ireland led the growth rankings for the fourth consecutive month, although its growth pace slowed to the weakest since January.
The European Central Bank is expected to make one more interest rate reduction in September, following a year-long campaign of rate cuts.
Input price inflation eased to a seven-month low, but charges in the services sector rose at the fastest rate in three months.
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