Business activity across the eurozone also shrank in May, at its fastest pace in two and a half years.
The PMI index fell to 47.5 in May from 48.7 in April, S&P Global found, once again driven by a slump in the services sector.
Williamson said the data showed the eurozone economy taking an “increasingly severe toll from the war in the Middle East”.
Job losses are also starting to become worryingly widespread as business confidence in any swift turnaround in the adverse economic climate fades further.
The service sector is being hit especially hard by the surge in the cost of living created by the war, notably via the demandsapping impact of higher energy prices. While there has been some support to manufacturing from precautionary stock building, this boost is starting to fade, with demand for both goods and services now in decline.
The region’s supply shock from the war is also intensifying, as indicated by increasingly widespread supply chain delays. Supply shortages threaten not only to constrain growth in the coming months but also have the potential to add further upward pressure to inflation.
The rise in the survey’s price gauges already hints at inflation running close to 4% in the coming months which, combined with the growing signs of the region slipping into an economic downturn, creates a deepening dilemma for policymakers.”
