The eurozone manufacturing sector continued to shrink in December on the back of an acceleration in order bookings and a contraction in output, according to final data released on Thursday by S&P Global.

HCOB's manufacturing Purchasing Managers' Index (PMI) fell slightly to 45.1 in December (November: 45.2), reaching a three-month low. The advance estimate was 45.2. Demand for manufactured goods in the euro area fell again – the pace of contraction accelerated in December. The slight decline in the new export orders indicator suggests that the faster decline in new business was mainly driven by domestic demand. The December contraction in output was the sharpest since October 2023. At the same time, the fall in new orders outpaced the decline in production, so that firms were at least able to maintain output.

Employment continued to contract throughout November, extending the current period of job losses to more than 18 months. Purchasing activity experienced another sharp monthly decline.In December, pre-production stocks of finished goods accumulated and held in warehouses fell. In addition, for the first time since August 2024, input prices remained stable. This stabilisation led companies to reduce their prices for the fourth consecutive month.

Manufacturers expressed greater optimism, with growth expectations reaching a four-month high, but overall business confidence remained subdued.
The survey revealed stark differences between the countries surveyed. In Germany, France and Italy, the situation continued to deteriorate, while in Spain the manufacturing sector improved significantly.

German manufacturers reported a significant and accelerating decline in activity in December, with the final HCOB manufacturing PMI index reaching a three-month low of 42.5, in line with the advance estimate and down from 43 in November.

France's final manufacturing PMI continued to fall below the 50-point threshold last month – from 43.1 in November to 41.9 in December. This was in line with the advance estimate and indicated the sharpest contraction since May 2020.

Italian manufacturers faced a sharp deterioration in operating conditions due to a drop in output and new orders; despite this, the manufacturing PMI rose from 44.5 to 46.2 in December.

In contrast, Spain's manufacturing economy ended 2024 on a positive note, as both output and new orders grew faster. The PMI rose from 53.1 to 53.3, approaching the 32-month high recorded in October.