Eurozone manufacturing activity slipped further into contraction territory in December, hitting a 10-month low amid a decline in new orders and production cuts.
The HCOB Eurozone Manufacturing PMI, which measures the overall health of the sector and is compiled by S&P Global, dropped to 48.8, down from 49.6 in November.
The decrease takes the Eurozone manufacturing sector further below the key 50-point mark, which separates contraction from expansion.
“Demand for euro area goods also saw fresh signs of weakness as new orders fell at the quickest pace in almost a year,” S&P Global said on 2 January.
“Worsened sales performances came despite continued discounting, even as the rate of input cost inflation ticked up to a 16-month high,” it added.
Across the Eurozone, Germany – the single currency bloc’s largest economy – posted its steepest decline in manufacturing sector conditions since February 2025, falling to a 10-month low of 47, down from 48.2 in November, according to S&P Global.
Italy’s manufacturing sector ended the year in negative territory despite a growth spurt in November, falling from 50.6 to 47.9 in December, fuelled by fresh declines in output and new orders.
Spain also saw contraction in the sector for the first time in eight months, driven by weakening demand that resulted in a drop in output and new orders. With a PMI reading of 49.6 in December – down from 51.5 in the previous month – S&P Global said there was a noticeable drop in demand from international clients.
However, Greece and France bucked the downward trend, rising to 52.9 and 50.7, respectively. France’s PMI reading marked a 42-month high, signalling its strongest expansion since June 2022.
In contrast, Asia’s manufacturing sector strengthened in the final month of 2025, as export orders continued to rise, according to S&P Global.
In South Korea, manufacturers reported the steepest rise in new orders since November 2024, while business confidence reached its highest level in just over three-and-a-half years.
The seasonally adjusted S&P Global South Korea PMI registered 50.1 in December, up from 49.4 in November. This indicated a renewed, albeit fractional, improvement in the health of the country’s technology-focused economy, S&P said.
“Exports were a notable point of strength, also rising for the first time in three months,” Usamah Bhatti, an economist at S&P Global Market Intelligence, said.
Most other Asian economies also showed manufacturing growth in December, including Taiwan, which recorded a PMI reading of 50.9, from 48.8 in November, boosted by an increase in production, new orders and inventories.
“There were signs that companies anticipate the recovery to continue into 2026, with manufacturers building their inventories and expressing stronger optimism around future output,” said Annabel Fiddes, economics associate director at S&P Global Market Intelligence.
The growth across Asia follows a stronger-than-expected PMI reading from China, the world’s second-largest economy. According to the latest data from the National Bureau of Statistics (NBS) released on 31 December, the country’s official PMI rose to 50.1 in the final month of the year, up from 49.2 in November.
The expansion snapped eight months of contraction, according to the data, amid a tit-for-tat tariff war with US President Donald Trump.
However, most countries have struggled to reach new deals with the US following Trump’s “America First” trade policy, which took effect on 7 August, resulting in tariffs ranging from 10% to 50% being imposed on more than 90 economies worldwide.
Countries that finalised new trade frameworks ahead of the August deadline, including the European Union and South Korea, face a 15% base rate. Taiwan’s rate has been set at 20%, while negotiations between the US and China continue.