Steel coils are pictured on Nov. 5, 2025, at a ThyssenKrupp steel factory in Duisburg, Germany. (Reuters/Leon Kuegeler)
Economic activity in the euro zone shrank at its sharpest rate in more than two-and-a-half years in May, as a war-driven surge in living costs hammered demand for services and pushed overall input price inflation to its highest in three-and-a-half years, a survey showed on Thursday.S&P Global's Flash Euro Zone Composite Purchasing Managers' Index fell to 47.5 in May from 48.8 — its lowest since October 2023 — and below a Reuters poll forecast which predicted no change from April. The reading marked the second consecutive month of contraction across the bloc's private sector.
A PMI below 50.0 indicates slowing activity.
"May's flash PMI survey data show the euro zone economy taking an increasingly severe toll from the war in the Middle East," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "The survey data indicate the euro area economy looks set to contract 0.2 percent in the second quarter."
Overall demand deteriorated sharply. New orders across the private sector fell at their fastest pace in 18 months, with new export orders — including intra-euro zone trade — declining at the steepest rate since January 2025. Services new business dropped sharply, while factory demand, which had posted a rise in April, swung back into decline.
