The HCOB Eurozone Composite PMI was revised higher to 50.2 in May 2025, up from the preliminary estimate of 49.5 but slightly below April’s 50.4.
Eurozone composite PMI revised up to 50.2
Although this marked the fifth consecutive month of expansion in private sector activity, the pace of growth remained marginal and was the softest since February, signaling that the eurozone’s economic recovery remains fragile and uneven. The modest improvement was largely driven by a rebound in manufacturing production, which helped to offset a surprise contraction in the services sector—the first decline in services activity since November 2024.
Divergences among the bloc's major economies persisted. Italy and Spain continued to lead growth, posting solid expansions supported by domestic demand and strong export performance. France, which had been a laggard in previous months, showed signs of nearing stabilization, while Germany—the eurozone’s largest economy—remained mired in contraction, weighed down by weak industrial demand and sluggish consumer sentiment.
New business inflows continued to decline
New business inflows continued to decline, pointing to ongoing weakness in demand across the region. Job creation, while still positive, was modest, reflecting caution among businesses amid persistent economic uncertainty. Backlogs of work fell at a moderate rate, indicating limited pressure on capacity and reducing the urgency for firms to expand their workforce.
On the inflation front, input cost pressures eased, with input cost inflation falling to its lowest level in six months. Output prices also rose only slightly, marking the weakest pace of charge inflation since October 2024, as firms sought to remain competitive amid soft demand conditions. Meanwhile, business confidence picked up for the first time since January, offering a tentative sign that firms are starting to see a light at the end of the tunnel, despite the still-challenging economic landscape.
