Eurozone services confidence slips while industrial sentiment improves

The Euro Area services confidence indicator declined for the fourth straight month, easing to 1.5 in May 2025 from a slightly upwardly revised 1.6 in April, marking its lowest level since April 2021.

Eurozone services confidence slips while industrial sentiment improves

Although confidence continued to wane, the reading still surpassed market expectations of 0.9, suggesting some resilience in the sector despite ongoing challenges. Within the services sector, managers reported a modest improvement in their assessment of the past business situation (–2.2 vs –4.2 in April). However, this gain was outweighed by a softer evaluation of past demand (1.4 vs 2.7), signaling fading momentum. Forward-looking indicators also pointed to a more cautious outlook: expectations for future demand fell to 5.3 from 6.3, and employment expectations edged down to 0.2 from 0.5, indicating slower anticipated hiring.

Industrial sentiment stabilized

In contrast, the industrial sector showed signs of stabilization. The Euro Area industry confidence indicator rose to -10.3 in May from a revised -11 in April, beating market forecasts of -11 and reaching its highest level since March 2024. The improvement was supported by a rise in production expectations (1.5 vs 0.4), as well as slight gains in the assessment of order books (-24.4 vs -25.1), employment sentiment (-4.0 vs -4.4), and a modest decline in selling-price expectations (7.9 vs 10.6), suggesting easing price pressures. Together, the data reflect a mixed picture across the Euro Area’s economy—services continue to lose steam amid softer demand and hiring outlooks, while industry shows tentative signs of recovery, possibly buoyed by improving external conditions and stabilizing input costs.