Economic growth in the eurozone showed only the faintest signs of life in April, as a sluggish services sector offset a stronger-than-expected rebound in manufacturing. The latest data from S&P Global’s Purchasing Managers’ Index (PMI) paints a mixed picture of the bloc’s economic momentum amid hopes of an interest rate cut by the European Central Bank (ECB).

The composite PMI reading for the eurozone edged up to 50.1 in April from a preliminary estimate of 49.7. While this figure technically indicates growth, it suggests the economy is teetering on the edge of stagnation, continuing its struggle to gain traction after a modest improvement earlier in the year.

Manufacturing output climbed at its fastest pace in over two years, supported by improved supply chains and rising industrial activity. However, services—the eurozone’s primary growth engine—barely expanded, with the services PMI falling to 50.1 from 51.0 in March. That marks the weakest performance in the sector since late 2024.

“The services sector, which is a major player, practically stagnated in April,” said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “Even though manufacturing output saw a surprising uptick, it wasn’t enough to prevent the overall slowdown in growth.”

Demand across the bloc remained weak, with new orders falling for an eleventh consecutive month. France, the eurozone’s second-largest economy, continued to lag behind its peers, recording its eighth straight month of contraction. In contrast, Spain led the region in growth, followed by Italy and Germany.

Employment saw a slight increase for the second month in a row, with job gains in services helping to offset losses in manufacturing. However, hiring remains cautious, reflecting wider uncertainty in the business climate. Business expectations for the year ahead fell to their lowest level since late 2022, marking a fourth consecutive monthly decline.

Amid the subdued economic picture, there was a positive development on the inflation front. Input costs and output prices both rose at their slowest pace in months, adding to market expectations that the ECB could cut interest rates in June. Several policymakers have already hinted at such a move.

“In the services sector, cost pressures are still relatively high, though they have eased a bit over the past couple of months,” de la Rubia said. “Inflation is down for sales prices and continued to trend lower… These latest figures seem to support the ECB’s stance.”

In equity markets, eurozone stocks declined following recent gains. The Euro STOXX 50 fell 1%, while Germany’s DAX dropped 0.7% and France’s CAC 40 dipped 0.5%. Industrial stocks led the retreat, with Airbus and Siemens among the laggards. Earnings reports brought mixed results, as Vestas and Hugo Boss posted strong gains, while Philips and Ferrari faced pressure.

With inflation cooling but growth failing to accelerate, attention now turns to the ECB’s upcoming June meeting, where a rate cut appears increasingly likely.

Global oil prices fell sharply on Monday, hitting their lowest levels in over four years, after the OPEC+ alliance confirmed it would speed up the unwinding of production cuts by boosting output in June. The move, aimed in part at penalizing members that exceeded quota limits, comes as global demand softens under the weight of escalating U.S.-China trade tensions.

Brent crude futures dropped as much as 4.6% during Asian trading hours to $58.50 per barrel, while West Texas Intermediate (WTI) crude fell nearly 5% to $55.53. Both benchmarks are at their lowest levels since February 2021.

The latest decision by OPEC+ — which includes the Organization of the Petroleum Exporting Countries and allies such as Russia — will see eight member nations raise production by 411,000 barrels per day (bpd) in June. This follows increases of 135,000 bpd in April and 411,000 bpd in May, bringing the total planned increase to nearly 1 million bpd over three months.

OPEC+ had initially implemented significant output cuts to stabilize prices during the COVID-19 pandemic. However, it began unwinding those cuts earlier this year, citing the need to discipline non-compliant producers such as Iraq and Kazakhstan.

In a statement released over the weekend, OPEC+ noted the changes could be paused or reversed depending on market conditions. “This flexibility will allow the group to continue to support oil market stability,” it said, adding that the decision gives countries a chance to compensate for previous overproduction.

The timing of the move has added to already mounting pressure on oil prices. Global demand has weakened as trade tensions between the United States and China continue to escalate. U.S. President Donald Trump’s tariff-driven trade policy has raised concerns over slowing economic growth, with recent data showing a contraction in the U.S. economy and declining manufacturing activity in China — the world’s largest oil importer.

Oil prices dropped more than 7% last week, their steepest weekly loss in a month. Analysts now say the market is increasingly driven by demand-side concerns. “The Saudis have taken their hands off the wheel when it comes to supply,” said Kyle Rodda, a senior analyst at Capital.com. “Any recovery in prices now depends entirely on whether the trade outlook improves.”

Markets are closely watching developments between Washington and Beijing. Trump said Sunday he may ease tariffs to reopen trade talks, while China confirmed it is reviewing recent diplomatic overtures from the U.S.

With rising supply and uncertain demand, oil markets remain volatile heading into the summer.