LONDON, May 6 (Reuters) – Euro zone services activity contracted in April for the first time in almost a year, hit by weakening demand and deteriorating export business as the Middle East war \u200bweighed on consumer-facing sectors, a survey showed on Wednesday.<\/p>\n
S&P Global’s Eurozone Services Purchasing \u200cManagers’ Index slumped to a 62-month low of 47.6 in April from March’s 50.2, just above a preliminary estimate of 47.4.<\/p>\n
Demand in the bloc’s dominant services industry weakened further last month, declining at the \u200bsharpest pace since October 2023, with new export business also deteriorating. The new business \u200bindex fell to 46.5 from 48.6.<\/p>\n
“The final euro zone PMI data confirm \u2060the earlier signs of an economy slipping into decline during April as the ongoing war \u200bin the Middle East derails the recovery that had been building prior to the outbreak \u200bof the conflict,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.<\/p>\n
April’s services downturn dragged an overall composite PMI, which tracks manufacturing as well, to 48.8 from 50.7, marking a 17-month low and \u200bmatching its preliminary reading. It hasn’t been sub-50 since the end of 2024.<\/p>\n
Among major economies, \u200bGermany, France and Spain all recorded contractions in private sector activity, with the euro zone’s two largest \u200ceconomies \u2060posting their fastest declines in over a year.<\/p>\n
Employment in the service sector remained broadly unchanged in April, a departure from a stronger hiring trend seen for five years.
Prices charged by service providers rose at the fastest rate in two years while input costs increased at a \u200bthree-year high as energy \u200bpressures intensified.<\/p>\n
“So far the \u2060service sector has been hardest hit, with consumer-facing business suffering a particular squeeze, amid a double whammy of surging energy prices and \u200bdisruption to travel,” Williamson said.<\/p>\n
Last week the European Central Bank left interest rates \u200bunchanged as \u2060expected but extensively debated a hike to combat soaring inflation and signalled both on and off the record it may pull the trigger in June.<\/p>\n
Business confidence in the service sector fell to \u2060a \u200b42-month low as firms grew increasingly pessimistic about growth \u200bprospects amid the prolonged conflict.<\/p>\n
Optimism across both services and manufacturing firms waned and the composite future output index fell \u200bto 54.9 from 56.9 – its lowest since September 2023.<\/p>\n
Reporting by Jonathan Cable; Editing by Joe Bavier<\/p>\n
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