Eurozone Manufacturing Contraction Steeper than Initially Thought

2026-01-02 09:41 By Joana Ferreira 1 min. read

The HCOB Eurozone Manufacturing PMI fell to 48.8 in December 2025, below both the preliminary estimate of 49.2 and November’s final reading of 49.6, marking the fastest pace of contraction since March.

Declines in output and new orders were the main drivers, with Germany recording the steepest deterioration and weakest performance since February.

Italy and Spain also remained in contraction, while France bucked the trend, posting its strongest expansion since June 2022.

Employment continued to fall across the region, extending a sequence of factory job losses to over two-and-a-half years, while backlogs of work declined, suggesting capacity was sufficient to handle existing orders.

Sales performances weakened despite ongoing discounting, even as input cost inflation rose to a 16-month high.

However, firms were the most optimistic about the year-ahead outlook since just before Russia’s full-scale invasion of Ukraine in February 2022.



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