European Services Sector Slumps Amid U.S. Trade Policy Uncertainty

Surveys reveal a slowdown in European business growth, with manufacturing in decline and the services sector contracting. The euro zone's PMI indicators indicate stagnation, driven by U.S. trade policy turmoil. Despite some manufacturing improvements, the outlook remains grim, with British companies struggling amid global trade tensions.

Business growth in Europe has hit a roadblock, according to surveys published this Wednesday. The erratic nature of U.S. trade policy is casting a shadow over economic sentiment, adversely affecting services in the euro zone and Britain, although output remains steady for now.

The Hamburg Commercial Bank's preliminary euro zone Purchasing Managers' Index (PMI) dropped to 50.1, barely staying above the threshold that separates expansion from contraction. The impact of recent U.S. tariff hikes is evident, as economic sentiment has deteriorated, said Jack Allen-Reynolds from Capital Economics.

The service sector's downturn pushed the economy into stagnation, with Germany and France showing notable contractions. Britain's companies face severe strains amidst a global trade war, while signs of manufacturing recovery in the euro zone offer a glimmer of hope, although Britain's manufacturing struggles persist.

(With inputs from agencies.)