FX.co ★ Eurozone manufacturing ends 2025 in contraction

The eurozone manufacturing sector closed 2025 on a downbeat note as production fell in December for the first time since February, according to the latest HCOB Eurozone Manufacturing PMI. The index dropped to 48.8 in December from 49.6 in November, marking a nine‑month low and signaling a sharper deterioration in business conditions.

After nine months of continuous growth, factory output across the currency bloc contracted in December, although the decline was moderate. New orders fell at the fastest pace in almost a year, while export demand decreased most sharply in 11 months.

Among eight monitored countries, Germany recorded the weakest performance, with manufacturing conditions worsening at the fastest rate since February 2024. Italy and Spain also returned to contraction. Greece showed a slight improvement, and France bucked the regional trend by posting gains, with its index reaching a 42‑month high.

Supply chain pressure intensified as supplier delivery times lengthened by the most since October 2022. Input cost inflation accelerated to its highest level in nearly 18 months, yet manufacturers continued to reduce their factory‑gate prices.

Employment in the industrial sector fell again in December, extending a run of job losses to more than two and a half years. At the same time, manufacturers’ sentiment about prospects for the next 12 months improved, reaching its highest level since February 2022.

Economists note that demand for eurozone industrial goods is slowing once more, but expectations for 2026 are comparatively more optimistic. Support for the sector could come from planned stimulus measures in Germany and rising defense spending across Europe.