The eurozone economy grew for a fifth straight month in May 2025, but the pace of expansion slowed, while services activity declined and overall demand remained subdued, according to HCOB PMI data released on Wednesday. The HCOB Eurozone Composite PMI fell to 50.2 in May from 50.4 in April, signalling only marginal growth and the weakest expansion since February. While manufacturing output held steady, the services sector contracted for the first time since November, with its PMI dropping to 49.7 from 50.1. Among the largest eurozone economies, Italy and Spain registered growth, with Italian activity rising at the fastest pace in over a year. France's downturn softened, while Germany saw its first contraction in five months. New business continued to decline, including export orders, prompting firms to draw down backlogs and hire cautiously. Employment rose slightly, driven by services, as factory jobs fell. Business sentiment improved modestly but remained muted, while inflationary pressures cooled. Input costs rose at the slowest pace in six months, and output prices increased only modestly, with manufacturing posting declines in both. HCOB Chief Economist Cyrus de la Rubia said the ECB is still likely to cut rates at its June 5 meeting, despite persistent cost pressures in services. He added that southern Europe is helping offset weakness in Germany and France, raising hopes of a mild recovery later this year. Attribution: Amwal Al Ghad English Subediting: M. S. Salama
