Euro Zone Economy Stalls in June as Services Show Limited Growth

Published on June 23, 2025

The euro zone economy showed no growth in June 2025, according to flash survey data from S&P Global, signaling stagnation for the second month in a row. The HCOB flash composite Purchasing Managers’ Index (PMI), which combines activity in the services and manufacturing sectors, remained unchanged at 50.2—just above the threshold of 50 that separates growth from contraction. Analysts had expected a slight improvement to 50.5.

1. Sectoral Breakdown

Services PMI inched up to 50.0 from 49.8 in May, indicating flat activity in the largest part of the euro zone economy.

Manufacturing PMI remained unchanged at 45.6, still indicating contraction in the sector.

The overall composite PMI stayed at 50.2, suggesting no significant growth or decline in overall business activity.

2. Regional Highlights

Germany, the euro zone’s largest economy, saw a slight uptick. Its composite PMI rose to 50.6, supported by the strongest increase in new manufacturing orders since 2021.

France experienced a deeper contraction. Its composite PMI dropped to 48.2, with declines in both services and manufacturing sectors.

3. Demand and Business Confidence

New business orders declined for the 13th consecutive month, reflecting continued weak demand across the bloc.

Despite this, business expectations rose to their highest level in four months, signaling some optimism for the second half of the year.

4. Monetary Policy Context

Euro zone inflation fell below the European Central Bank’s 2% target in May, prompting the ECB to hold off on further interest rate cuts.

ECB Governing Council member Mario Centeno called for additional stimulus, warning that both supply and demand remain too weak to support a sustainable recovery.

The ECB has already cut rates eight times since 2023, bringing its key rate to 2%.

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Title: Euro Zone Economy Stalls in June as Services Show Limited Growth

Date: June 23, 2025

Author: Reuters / Maria Ponnezhath

Source: Investing.com (via Reuters)