Business activity growth in Europe slowed in June, pointing to a difficult end to the second quarter, according to preliminary data Friday.
The euro zone's flash composite Purchasing Managers' Index dropped to 50.3 in June from 52.8 in the previous month. This was below the 52.5 expected by analysts. A reading above 50 marks an expansion in activity, while one below 50 marks a contraction.
"Eurozone business output growth came close to stalling in June, according to the latest HCOB flash PMI survey data produced by S&P Global, pointing to renewed weakness in the economy after the brief growth revival recorded in the spring," S&P Global said in a release.
"Although energy and supply chain worries have eased since late last year, June has seen a further escalation of concerns over demand growth, and in particular the impact of higher interest rates, and the resulting possibilities of recessions both in domestic markets and further afield."
Speaking to CNBC's Street Signs Europe, Chris Williamson, chief business economist at S&P Global Market Intelligence, described the numbers as "worrying."
"Higher interest rates, the rise in the cost of living, all beginning to take their toll," he said.
The European Central Bank has been increasing interest rates consistently for the past 12 months in an effort to bring down inflation. Higher rates can lead to higher costs for companies across the bloc, however, and so often become a drag on output.