Eurozone Composite PMI Slips to 49.5, STOXX 600 Drops 1%

Key Moments:

Eurozone Growth Falters as PMI Readings Signal Economic Slumps

Fresh data from the HCOB Purchasing Managers’ Index (PMI) survey revealed continued weakness in Europe’s economy. The Eurozone Composite PMI, which blends output from manufacturing and services, fell to 49.5 in May from the previous 50.4. This underscores analysts’ expectations of 50.7. The services sector was stuck in contraction territory, and although there was a modest uptick in industrial activity, the broader picture remained subdued.

Following the data’s publication, stocks across Europe ticked lower, with both the STOXX 500 and the broader STOXX 600 indexes falling by around 1%. Freenet AG was the worst performer as it experienced a drop of roughly 16%, followed by Embracer Group AB and CTS Eventim AG, which dropped 14.75% and 9.68%, respectively. Meanwhile, Johnson Matthey was one of the companies that managed to climb, and its share price surged by 30%.

Manufacturing Improves Slightly, Services Sink

The Eurozone’s Manufacturing PMI came in at 49.4 in May, edging up from 49.0 in April and surpassing expectations for a 49.3 reading. However, this figure remains below the neutral 50 threshold, indicating a continued, albeit slower, contraction in manufacturing.

Meanwhile, the Services PMI dropped below April’s 50.1, hitting 48.9 and falling short of the 50.3 consensus estimate. This marked the lowest services reading in 16 months and weighed heavily on overall activity in the bloc’s economy.

Both the European Commission and the ECB project the Eurozone’s growth rate to remain below 1% in 2025. They also cautioned that any escalation of trade disputes could deepen current challenges and delay recovery further.