Eurozone PMI Holds at 51.5 as Services Slow, Manufacturing Shows Mild Improvement

Business activity across the Eurozone remained in expansion territory in January, but momentum showed signs of softening as the services sector lost steam, according to the latest flash HCOB PMI data.

The Composite PMI held steady at 51.5, slightly below market expectations of 51.6. While the headline figure still points to modest growth, the composition of activity revealed growing divergence between sectors.

The Services PMI slipped to 51.9 from 52.4 in December, defying forecasts for a rise to 52.8. The slowdown suggests that consumer-facing and business services are beginning the year with less momentum, amid persistent cost pressures and fragile demand conditions.

Manufacturing, by contrast, showed tentative signs of stabilization. The Manufacturing PMI edged up to 49.4 from 48.8 in December, beating expectations of 49.0. Although the sector remains in contraction territory below the 50 threshold, the pace of decline moderated, hinting at a possible bottoming-out after a prolonged downturn.

Overall, the data paints a picture of a Eurozone economy growing only marginally, with services no longer providing the same degree of support seen late last year, even as manufacturing shows early signs of resilience.

From a market perspective, the euro came under mild pressure following the release. The EUR/USD pair struggled to regain ground after dipping to an intraday low near 1.1728, reflecting the market’s cautious interpretation of slowing service-sector momentum across the bloc.