Oil prices retreat and global stocks hit record highs after Trump hails ‘great progress’ on Iran deal – business live

Service industries in the eurozone shrank in April for the first time in almost a year as exports worsened amid the Middle East war, according to a closely-watched survey.

The purchasing managers’ index (PMI) from S&P Global slumped to a 62-month low of 47.6 last month from 50.2 in March, just above a preliminary estimate of 47.4. Any reading below the 50 mark points to contraction; any reading above indicates growth.

The composite survey, which also includes manufacturing, points to stagflation in the eurozone at the start of the second quarter, as the first decline in private sector business activity since December 2024 came alongside the sharpest rise in prices charged in three years.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

double quotation markThe final eurozone PMI data confirm the earlier signs of an economy slipping into decline during April as the ongoing war in the Middle East derails the recovery that had been building prior to the outbreak of the conflict.

Although indicative of only a modest 0.1% quarterly GDP decline so far, the absence of any signs of the crisis easing any time soon suggests that the downturn may soon deepen.

So far the service sector has been hardest hit, with consumerfacing business suffering a particular squeeze, amid a double whammy of surging energy prices and disruption to travel. However, while the manufacturing sector has shown resilience so far, this has reflected stock building as companies worry about further price hikes and supply squeezes.

This will not only dampen manufacturing growth in the coming months as the stock build fades, but will also have a knock-on effect for service sector businesses that are reliant on manufactured inputs, most notably food and of course refined fuels, should these further supply and price worries materialise.

The prospect of interest rate hikes are also front of mind among many financial service providers, hitting real estate activity in particular. However, how the European Central Bank responds to the sharp rise in inflation being signalled by the PMI will have a key bearing on the economic outlook well beyond real estate. The concern is that, with business growth expectations already down sharply since the war started, higher interest rates will exacerbate this initial slump in sentiment.