Eurozone PMIs Show Fragile Stabilisation as U.S.-Iran Peace Deal Slashes Oil Prices

The June 2025 eurozone PMI data paint a picture of an economy stabilising at best, with the private sector barely expanding. At the same time, the U.S.–Iran peace deal delivered a sharp drop in oil prices and a surge in European equities. Here is the fact-checked breakdown of what happened and what it means.

Private Sector Activity: Stabilisation, Not Recovery

The flash and final June PMI readings told slightly different stories, but the overall message was clear: the eurozone is not out of the woods.

• The Flash Composite PMI rose to 49.5 in June, up from 48.5 in May — a three-month high but still below the 50.0 expansion threshold, signalling a continued contraction in private sector activity .
• The Flash Services PMI edged up to 48.9 from 47.7, also a three-month high, yet still in contraction territory .
• The Flash Manufacturing PMI was 51.3, down from 51.6 in May and a four-month low .

However, the final (revised) Composite PMI came in at 50.6 for June, up from 50.2 in May and above the flash estimate, marking the strongest expansion in three months. This revision was driven by faster output increases in both manufacturing and services .

Key nuance: The flash reading (49.5) suggested contraction, while the final reading (50.6) showed barely positive growth. The divergence reflects Germany's relative improvement versus France's persistent weakness — the German rebound pulled the final figure over 50, but the underlying picture was one of near-stagnation .

Input Costs and Price Pressures Ease

Inflationary pressures in the eurozone continued to moderate during June.

• The pace of input cost inflation eased for the fourth consecutive month in June and was the weakest since November 2024 .
• Output prices rose at a faster pace than in May, but overall price pressures faded, with both input costs and output prices rising at their softest rates in 2025 so far .
• This easing is significant because April 2025 had seen the sharpest jump in manufacturers' selling price inflation since the eurozone PMI series began in 1997, largely driven by the Iran war energy shock . June's moderation suggests that shock was fading.

U.S.–Iran Peace Deal and Energy Price Collapse

The U.S. and Iran signed a preliminary memorandum of understanding in Paris on June 14–15, 2026, agreeing to end their three-and-a-half-month conflict and reopen the Strait of Hormuz .

The immediate impact on oil prices was dramatic:

Benchmark	Price Change	Level
Brent crude	−4.1% (−$3.58)	~$83.75/barrel
WTI	−4.7% (−$4.01)	~$80.87/barrel
Brent (next day)	−4% (−$3.29)	$79.88 — a three-month low

Oil prices hit their lowest levels since before the Iran war began in March 2025 . The deal reopened the Strait of Hormuz, enabling the restart of millions of barrels of Iranian oil exports, which boosted global supply expectations .

Caveat — normalisation will take months: S&P Global and Al Jazeera both reported that physical crude markets would remain tight through the summer, and U.S. fuel prices would take months to normalise as logistics and sanctions relief phase in gradually .

Broader Economic and Market Picture

European equities surged to record highs.

• The pan-European STOXX 600 hit a record high on June 15, 2026, the day the U.S.–Iran deal was announced, driven by a relief rally across most sectors .
• The FTSE 100 opened up 0.5% at 10,525, and the DAX and CAC also gained sharply .
• Markets moved decisively into "risk-on" mode: equities stronger, oil sharply lower, the U.S. dollar softer, and bond yields declining .

Why this matters for the broader economy:

• Lower energy prices directly reduce input costs for eurozone manufacturers, which was already visible in the easing PMI price indices for June .
• The removal of a major geopolitical risk premium improves business confidence — the June PMI survey noted improved confidence and stabilising new orders .
• However, the eurozone's recovery remains narrow. The composite PMI of 50.6 is barely above stagnation, services remain weak, and the boost from lower energy prices will take time to flow through to end-consumer prices and demand .

Bottom line: The June 2025 PMI data show the eurozone economy stabilising near stagnation, with input cost inflation easing for a fourth straight month — helped decisively by the U.S.–Iran peace deal, which slashed oil prices to three-month lows and triggered a record stock-market rally. But physical oil supply normalisation will take months, and the eurozone's private sector remains too weak to call a genuine recovery.