European factory activity ends 2025 in deeper contraction

[BENGALURU/SINGAPORE] Eurozone manufacturing activity shrank further in December.

Factory activity in the common currency bloc slid into deeper contraction last month as production decreased for the first time in 10 months on further declines in new orders.

The HCOB Eurozone Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 48.8 in December from 49.6 in November. It was the lowest reading in nine months and below the 50 level that separates growth from contraction for the second straight month.

Surveys highlighted a broad-based decline in activity in the 20-nation eurozone.

Germany, the bloc’s largest economy, recorded the weakest performance among the eight nations monitored with the PMI reading hitting a 10-month low.

Italy and Spain also slipped back into contraction territory.

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“Demand for manufactured products from the eurozone is slowing down again,” said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “Companies seem neither able nor willing to build momentum for the coming year, but are instead exercising caution, which is poison for the economy.”

France provided a rare bright spot, with its manufacturing PMI jumping to a 42-month high.

In Britain, outside the European Union, activity grew at its fastest pace in 15 months in December, riding a recovery in demand after finance minister Rachel Reeves’ budget provided some relief. REUTERS