The private sector's business activities in the Eurozone unexpectedly contracted, with a significant decline in the service sector.

Business activity in the Eurozone unexpectedly contracted for the first time since the end of 2024. The war in Iran has put pressure on consumers, leading to a significant decline in the service sector.

The composite Purchasing Managers' Index (PMI) compiled by S&P Global dropped to 48.6 in April, falling below the 50 threshold that separates expansion from contraction. The previous month's figure was 50.7, and analysts had previously predicted it to fall to 50.1.

This trend is similar to that of Germany, where the industry remains stable while the service sector has experienced a significant decline. France's manufacturing sector performed better than expected, achieving its best result since 2022, but the service sector also declined. Price pressures across the region have continued to rise.

Bloomberg quoted Chris Williamson, the chief business economist of S&P Global Market Intelligence, as saying on Thursday (April 23): "The eurozone is facing an increasingly severe economic predicament due to the ongoing war in the Middle East. This poses a huge challenge for policymakers. At the same time, the increasingly widespread supply shortages may further restrain economic growth and bring greater upward pressure on prices in the coming weeks."