Worryingly, German manufacturing data is also looking weaker, plus German wages are now starting to climb. About time?
The German composite PMI reading slipped to 49.6 from 50.5 in April, a six month low. A reading below 50 signals a contraction - so it's worrying news. Although the German services PMI remained at 52.2 for May, its manufacturing PMI figure sank to 45, close to a three-year low.
Germany has been Europe's only economy that has grown at all recently. Much of this has been about pinning down wages to help its exporters stay competitive. Wages though are starting to creep up - its chemical industry union has just agreed a 4.5% wage hike, a rate well above inflation - making Germany less competitive.
Holiday hopeMeanwhile in Spain, confidence has been rattled again this morning with Bankia, Spain's part-nationalised bank, on the verge of asking for a £12bn hand-out (its shares have already been suspended). So expect plenty more euro volatility.
But the euro volatility is good news for Brit holidaymakers. This time last year £1,000 bought you around €1115. Currently £1,000 buys you around €1,244. If you're going to Greece, perhaps consider taking lots of cash - just in case.