The manufacturing PMI in the eurozone has risen to a two-year high, of 47.6, according to the latest HCOB Eurozone Manufacturing PMI update, for February 2025.
While the manufacturing sector in the eurozone remained in contraction in February, factory production neared stabilisation, with reductions in new orders – both total and from abroad – hitting their weakest levels in nearly three years.
The HCOB Eurozone Manufacturing PMI Output Index stood at 48.9 for the month, which is a nine-month high.
Companies across Europe reduced their pre-production inventory and purchasing cutbacks less aggressively, while optimism about manufacturing growth accelerated for the first time since Russia’s invasion of Ukraine, the data showed.
However, at the same time, employment losses intensified, with job cuts at factories accelerating at the fastest pace for four-and-a-half years. In addition, input cost inflation rose to a six-month high.
‘Finding its footing’
“It’s still too early to call it a recovery, but the PMI hints that the manufacturing sector might be finding its footing,” commented Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. “New orders are falling at the slowest pace since May 2022, and production is edging closer to stabilising. So, after almost three years of recession, we could see a bit of growth in the coming months. A quick formation of a government in Germany, political stability in France, and a deal with the US on key tariff issues would definitely help.
“Job cuts sped up in February, but it’s not uncommon for layoffs to continue even after a recession ends. So, this doesn’t necessarily mean a recovery is far off.”
Country by country
On a country-by-country level, many eurozone members showed signs of improvement, with Germany, France, Italy, and Austria experiencing softer declines, and the Netherlands stabilising after a prolonged deterioration. Spain, too, saw a decline in manufacturing for the first time in over a year.
“Spain is still showing growth in production, but its Manufacturing PMI, which has been doing rather well for the past three years, dipped below the 50 mark due to declining new orders,” de la Rubia added. “Most companies are staying optimistic about the future.
“The confidence index is just above the long-term average. This is surprising considering the tariff threats from the US, but companies know that a recession is usually followed by a recovery. There are also signs that Russia’s war against Ukraine might end this year, and the expected political stabilisation in Germany is certainly a positive element, too.” Read more here.
