Eurozone Private Sector Slows More than Initially Thought

The HCOB Flash Eurozone Composite PMI inched lower to 51.3 in January of 2026 from the 51.5 in the previous month, revised downwards from 51.5 and under the initial market expectations of 51.8. Despite dropping to a four month low, the result reflected 13 straight months of growth in the Eurozone's private output. The expansion was supported by higher business for services providers (51.6 vs 52.4 in December 2025) and a rebound for manufacturing (50.5 vs 48.9). New orders at the aggregate level rose for a sixth month, although at a sharply lower magnitude with restriction from a fall in export orders. Despite growth in output and new business, firms cut back on their employment levels at a marginal pace, mainly due to lower employment in Germany. On the price front, input cost inflation rose to a near one-year high, driving output charges to accelerate to its highest since April 2024. Looking forward, business sentiment rose to a 20-month high on greater optimism or manufacturers.

The HCOB Flash Eurozone Composite PMI was at 51.5 in January of 2026, remaining unchanged from the previous month and slightly below market expectations of 51.8 to reflect a momentary stabilization in private-sector activity growth in the currency bloc. The growth was supported by the services sector (51.9 vs 52.4 in December 2025) despite its slowdown, while manufacturing production returned to growth (50.2 vs 48.9). New orders at the aggregate level rose for a sixth month, although at the lowest magnitude in four months with restriction from a fall in export orders. Despite growth in output and new business, firms cut back on their employment levels at a marginal pace, mainly due to lower employment in Germany. On the price front, input cost inflation rose to a near one-year high, driving output charges to accelerate to its highest since April 2024. Looking forward, business sentiment rose to a 20-month high on greater optimism or manufacturers.

The HCOB Flash Eurozone Composite PMI for December 2025 was revised lower to 51.5, from a flash estimate of 51.9 and down from November’s 30-month high of 52.8. The latest figures point to a cooling in private-sector activity, driven by a moderation in services growth (PMI at 52.4 vs 53.6) and a continued downturn in manufacturing (PMI at 48.8 vs 49.6). New business rose in December, marking five consecutive months of growth, though the upturn slowed to its weakest since September. Weaker demand allowed firms to reduce backlogs at the fastest rate in three months. Employment continued to rise, with job creation ticking slightly higher from November, though growth remained marginal amid further manufacturing cuts. Input cost inflation accelerated to a nine-month high, while output price growth held steady from November, the joint-weakest since October 2024. Looking ahead, eurozone companies were slightly less optimistic towards the next 12 months than they were during November.