Euro zone activity falls in May amid Iran war energy shock
Euro zone activity shrank in May as the Iran war drove energy prices higher. The European Commission cut growth forecasts while the ECB prepares for a rate hike.
The euro zone private sector contracted at its sharpest pace in over two years in May as energy shocks from the Iran war hammered demand. The Flash Euro Zone Composite PMI fell to 47.5 from 48.8, missing the Reuters forecast of no change. For investors, this signals a deepening stagflation risk that complicates central bank efforts to balance rate hikes with a cooling economy.
### Energy Costs Stifle European Growth Activity in the dominant services sector plummeted as rising living costs curbed consumer spending. Survey data showed input price inflation hit a three-and-a-half-year high during the month. This surge in costs has pushed the private sector into its second consecutive month of contraction.
