Euro zone private sector economic activity eased in May, the latest survey conducted by Royal Bank of Scotland and NTC Economics showed Friday.
The composite output index dropped to 51.1 in May from 51.9 in April, with the reading a steeper decline than what analysts had expected.
A reading above 50 indicates expansion in private sector, while a reading below 50 suggests contraction. The month's reading marked the weakest rate of expansion since July 2003. The slower growth rate suggested contraction in the incoming new business placed at both manufacturing and service sector companies.
The flash estimate of Purchasing Mangers' Index, or PMI, for manufacturing sector stood at 50.5 in May, down from 50.7 in April. Meanwhile, services PMI declined to 50.6 from 52.
Commenting on the flash PMI data, RBS Head of Euro Area Economics, Jacques Cailloux stated, "The latest data continue to point to the gradual slowdown of the Euro zone private sector economy and is consistent with our view that the euro area private sector will have ground to a halt by mid year."
Input price inflation eased slightly for the second straight month in euro zone, though it remained above the long-run average. At the same time, output price inflation in manufacturing dropped to a five-month low.
BNP Paribas's economist, Clemente De Lucia said the European Central Bank should retain interest rates on hold for a long time.
The German manufacturing sector recorded strong output growth in May, a survey from NTC Economics and BME showed. Activity in the service economy cooled to its slowest rate since April. The flash PMI for manufacturing sector came in at 53.5, slightly down from 53.6 in April and the services PMI eased to 53.7 from 54.9.
The survey from NTC Economics and CDAF revealed that the Flash French Composite Output Index slid to 51.3 in May from 52.9 in April, signaling the weakest expansion of overall output since July 2003. The manufacturing PMI rose to 51.3 from April's six month low of 51.1. Economists had expected the index to fall to 51 in May. On the other hand, the services PMI slid to 50.7 from 52.8 in April.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.