Eurozone services sector slows further in April

Eurozone services activity contracted in April for the first time in nearly a year, as weakening demand and a decline in export business weighed on the bloc’s dominant sector, according to new survey data.

The Services Purchasing Managers’ Index (PMI) fell sharply to 47.6 in April from 50.2 in March, marking its lowest level in five years and coming in slightly above the preliminary estimate of 47.4. A reading below 50 indicates contraction.

The downturn reflects growing pressure on consumer-facing industries, with the ongoing conflict in the Middle East dampening demand across the region. The survey showed that overall demand in the services sector declined at the fastest pace since October 2023, while new export business also deteriorated. The new business index dropped to 46.5 from 48.6.

The services slowdown dragged the eurozone’s composite PMI—which includes both services and manufacturing—down to 48.8 from 50.7, a 17-month low that matched earlier flash estimates. The index has not fallen below the 50 threshold since late 2024.

The bloc’s major economies, Germany, France, and Spain all reported contractions in private sector activity, with Germany and France recording their steepest declines in over a year.

Business confidence within the services sector also weakened significantly, dropping to its lowest level in three and a half years as firms grew increasingly pessimistic about growth prospects amid the prolonged geopolitical tensions.