Eurozone Manufacturing PMI Hits Two-Year High Despite Ongoing Contraction

The Eurozone’s manufacturing PMI rose to 47.6 in February 2025, its highest level in two years, according to data from S&P Global and Hamburg Commercial Bank.

Although still below the neutral threshold of 50, which separates contraction from expansion, the figure signals a slower pace of decline in the sector. Economists see this as a sign that the economic crisis gripping the Eurozone since early 2023 may be easing.

Economist Cyrus de la Rubia noted that new orders fell at their slowest pace since May 2022, and production is nearing stabilization. He suggested that after nearly three years of recession, modest growth could emerge in the coming months.

However, he emphasized that political developments such as a stable government in Germany, steady leadership in France, and tariff agreements with the United States could play a pivotal role in sustaining recovery.

Germany’s manufacturing PMI climbed from 45.0 in January to 46.5 in February, marking its highest level since January 2023. While still contracting, the slower decline in new orders—the weakest since April 2022—offers hope that Germany’s industrial recession could end soon.

Europe’s Industrial Struggles

However, challenges persist as job cuts accelerated and demand remained weak. De la Rubia underscored the need for bold economic plans and infrastructure investments to modernize Germany’s economy.

Meanwhile, the United Kingdom faced a contrasting scenario. Its manufacturing PMI dropped to 46.9 in February from 48.3 in January, marking a 14-month low and signaling contraction for the fifth consecutive month.

UK manufacturers struggled with weak demand, low customer confidence, and rising operational costs. Job losses reached their highest level since May 2020 due to increased payroll taxes and inflationary pressures.

Across the broader Eurozone, February’s composite PMI held steady at 50.2, signaling marginal economic growth. However, it also highlights disparities within the bloc.

While Germany showed signs of improvement, France experienced its sharpest decline in business activity in nearly 18 months. The manufacturing sector’s struggles reflect broader economic challenges, including high energy costs and geopolitical uncertainties.

Economists warn that, although inflationary pressures have eased slightly, weak demand and labor market issues still hinder Europe’s industrial recovery. These challenges continue to weigh heavily on growth prospects.

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