(Alliance News) - The eurozone private economy fell into contraction territory last month, a survey on Wednesday showed, as activity in the service sector declined on a slump in new export business.

The S&P Global eurozone composite purchasing managers' index sunk to a 17-month low of 48.8 points in April, from 50.7 in March. Coming in below the 50 point mark, the reading suggests the sector is in decline. It was above the 48.6 flash reading, however.

"The latest S&P Global PMI survey data pointed to stagflation in the euro area economy at the start of the second quarter, as the first fall in private sector business activity since December 2024 was accompanied by the sharpest rise in prices charged in three years. Additionally, business confidence moderated to a 31-month low and there was a further reduction in employment," S&P Global said.

"Input cost pressures continued to rise substantially in April. The rate of inflation accelerated further to a 40-month high, reflecting a broad-based quickening at the sector level. Prices charged were subsequently raised more aggressively at the beginning of the second quarter, with firms in both sectors lifting their fees to greater degrees than in March. The overall rate of increase in charges was the sharpest in three years."

The private sector decline "was entirely reflective" of a fall in the services economy.

The S&P Global services PMI fell to 47.6 in April, from 50.2 in March but was slightly above the 47.4 flash estimate.

S&P Global said the latest data suggested "the quickest reduction in output since February 2021".

"Demand for eurozone services decreased further during the latest survey period. In fact, the reduction was the sharpest since October 2023. This partly reflected a deterioration in new export business volumes. Employment in the eurozone service sector was broadly unchanged in April, marking the second straight month in which this has been the case. However, this marked a noteworthy deviation from the robust job creation trend seen (on average) across the five years prior to the outbreak of the war in the Middle East. Nonetheless, backlogs of work were cleared at the quickest pace since March 2025," S&P Global said.

Confidence among service sector firms hit a 42-month low last month.

The composite PMI is calculated using a weighted average of the service sector data and earlier manufacturing readings. On Monday, data showed the manufacturing PMI climbed to a 47-month high of 52.2 points in April from 51.6 points in March.

The composite PMI features a panel of around 5,000 private sector firms. Survey responses were collected between April 9 and 27.

By Eric Cunha, Alliance News news editor

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