Financial News: Eurozone Manufacturing Activity Falls Most In 9 Months

Eurozone Manufacturing Activity Falls Most In 9 Months

(RTTNews) - The euro area manufacturing activity contracted the most since March 2025 with production levels falling for the first time since last February, the survey compiled by S&P Global showed Friday.

The HCOB final manufacturing Purchasing Managers' Index declined to 48.8 in December from 49.6 in November. The flash score was 49.2.

The reading fell further below the 50.0 no-change mark indicating a sharper deterioration in factory operating conditions. The reading was the lowest since March 2025.

Factory output decreased across the bloc after nine consecutive months of growth. There was an accelerated fall in new order intakes. Exports drove total new business volumes lower as foreign demand dropped the most in eleven months.

Purchasing activity was reduced to the strongest extent since March last year and post-production inventories declined at the softest pace since September 2024.

There was growing evidence of supply-chain pressure for manufacturers. Input cost inflation intensified. The rate of increase in purchasing prices was the fastest in close to a year-and-a-half.

Despite stronger cost pressures, factories discounted their goods prices. Charges declined for the seventh time over the last eight months in December.

Further, factory job losses were extended into the final month of the year, stretching the current sequence of fall to just over two-and-a-half years.

Finally, sentiment among manufacturers improved for the year ahead. In fact, growth expectations were their strongest since February 2022.

Hamburg Commercial Bank Chief Economist Cyrus de la Rubia said there were some surprising regional developments in December.

"Overall, it will not be easy for the manufacturing sector of the eurozone to gain a foothold in 2026," the economist said. "However, expansionary fiscal policy could help," de la Rubia added.

Manufacturing performances worsened in a number of key economies in December. Most notable was Germany, which registered its steepest fall since last February. Italy and Spain also showed renewed drags.

Meanwhile, France bucked the downward trend in manufacturing PMI readings, with its index rising to a 42-month high.

Germany's manufacturing sector registered a decrease in output for the first time in ten months amid a sustained fall in demand. The final factory PMI fell to 47.0 in December from 48.2 in the previous month. The initial score was 47.7. In contrast, France's manufacturing activity registered its strongest month in three-and-a-half years in December. The final manufacturing PMI rose to 50.7 from 47.8 in the prior month. The reading was slightly above the flash estimate of 50.6.

Italy's manufacturers closed the year in negative territory after having failed to sustain growth spurt in November. The PMI plunged to 47.9 in December from 50.6 in the previous month.

Spain's manufacturing activity deteriorated for the first time since April amid falls in both output and new orders. The factory PMI registered 49.6 in December compared to 51.5 in November.

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