The eurozone economy stabilised in June after two months of contraction, with improving business confidence and easing inflationary pressures helping support activity, according to the latest S&P Global PMI survey.

The S&P Global Eurozone Composite PMI Output Index rose to 50.0 in June from 48.5 in May, moving back to the 50.0 no-change mark for the first time since March. Growth in manufacturing offset a slower decline in the services sector, while stronger activity in Italy, Spain and Ireland helped balance continued, though easing, contractions in Germany and France.

New business declined for the fourth consecutive month, but the pace of contraction eased. Export orders also continued to fall, although at a slower rate. Companies reduced outstanding work, but employment was broadly unchanged after job losses accelerated in May.

Business confidence improved to a four-month high, with firms reporting the strongest optimism for the coming year since the outbreak of the Middle East conflict.

Cost pressures also moderated. Input price inflation eased to a four-month low, while output price inflation slowed to its weakest pace since March.

The S&P Global Eurozone Services PMI Business Activity Index increased to 49.4 in June from 47.7 in May. Although it remained below the 50.0 threshold for a third straight month, the decline in services activity was only marginal. Employment in the sector returned to growth at the fastest pace since January, while business confidence reached its highest level since February.

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