Business at the eurozone's banks, restaurants and airlines contracted for a fourth straight month in May, but at a slower pace than in the previous month. The purchasing managers' index (PMI) for the services sector rose to 47.9 in May from 47.7 in April, where a reading under 50 indicates contraction. The improvement in the PMI, which is based on a survey of managers at 2,000 services companies, was less than had been expected, with analysts forecasting a rise to 48.3. The airline sector weighed particularly hard on the index, as demand for travel has declined sharply in recent months due to the war in Iraq and the outbreak of the SARS virus.
Following the manufacturing PMI on Monday, which showed that manufacturing activity contracted for a third month in May, analysts said the data paints a "gloomy picture" of the eurozone economy. Within the eurozone services sector, the German PMI fell to 44.4 in May from 44.6 in April, against a forecast for a rise to 45.5, while the French PMI fell to 51.0 from 51.1. In Italy, the sector returned to growth, with the index edging up to 50.1 from 49.8. //www.fxcentre.com