Europe’s economy is still contracting. But it’s contracting less enthusiastically than expected, which apparently counts as good news these days.
The S&P Global Flash Eurozone Composite PMI rose to 49.5 in June 2026, up from 48.5 in May and comfortably above the 49.1 that analysts had penciled in. It’s the highest reading in three months, and while anything below 50 still signals shrinkage in private-sector activity, the direction of travel has investors cautiously optimistic.
What the numbers actually show
The services sector, which had been dragging the broader economy down, showed signs of a less severe decline with a reading of 47.7. Manufacturing output, meanwhile, held above the expansion threshold at 51.2, though that represents a five-month low.
On the inflation front, the news was genuinely encouraging. Input cost inflation eased to its slowest pace since the escalation of the Middle East conflict. Output charges increased at the weakest rate in three months.
