FX.co ★ European Factory Activity Contracts Slightly

The HCOB Eurozone Manufacturing PMI dipped to 49.8 in September 2025, down from the three-year peak of 50.7 observed in August. This figure was revised upwards from a preliminary estimate of 49.5 but remained significantly below the initial market expectations of 50.7. This indicates a continued period of contraction in the bloc's manufacturing activity, apart from the one-off expansion last month, a trend that has persisted since June 2022 following Russia's incursion into Ukraine, which caused shortages in essential raw materials. Although new orders declined marginally, they did so at the swiftest rate since March, largely due to decreased export sales. Nonetheless, reduced backlogs enabled companies to boost production levels. The indication of slumping demand led to the fastest pace of job cuts in three months. On the pricing front, firms reported decreased operating costs for the first time since June, prompting a reduction in output prices. Looking ahead, manufacturers continue to express optimism about production levels for the coming 12 months.