FX.co ★ Eurozone Manufacturing Contracts in December

The HCOB Eurozone Manufacturing PMI dropped to 48.8 in December 2025, coming in below both the preliminary estimate of 49.2 and the final reading of 49.6 for November. This marks the fastest rate of contraction since March. The downturn was primarily driven by decreases in output and new orders, with Germany experiencing the most significant decline and its weakest performance since February. Meanwhile, Italy and Spain also remained in contraction, whereas France diverged from this trend, showing its strongest growth since June 2022. Employment across the region continued its downward trend, extending over two-and-a-half years of consecutive factory job losses, as backlogs of work decreased, indicating that existing orders could be managed with current capacity. Sales performances weakened despite ongoing discounting, while input cost inflation surged to a 16-month peak. Nevertheless, firms demonstrated the highest level of optimism regarding the year-ahead outlook since just prior to Russia's full-scale invasion of Ukraine in February 2022.