Eurozone Business Activity Falls to 31-Month Low in May

Business activity across the eurozone slowed sharply in May, reaching its lowest level in more than two and a half years. 8 in April. The reading marks the second consecutive month below the 50 threshold that separates expansion from contraction.

6, the worst reading since February 2021. 4, though new orders declined for the first time in months.

France recorded the sharpest decline.

6 in April. 4 but remained in contraction territory. German employment fell at the fastest rate in over a year and a half, led by cuts to manufacturing payrolls. Input cost inflation accelerated to a three-and-a-half-year high. Prices charged for goods and services rose at the fastest pace in 38 months.

Money markets are pricing in more than an 80% probability of a 25-basis-point rate hike at the next ECB meeting, with two further increases anticipated by year-end.