Manufacturing activity in the euro zone weakened further in December, ending 2025 in deeper contraction as demand faltered and new orders declined, private surveys showed. The HCOB Eurozone Manufacturing PMI fell to 48.8 from 49.6 in November, its lowest level in nine months and below the 50 mark separating growth from contraction for a second consecutive month. Germany recorded the weakest performance among major economies, while Italy and Spain also slipped back into contraction, highlighting broad-based weakness across the region.

France offered a rare bright spot, with its manufacturing PMI rising to a 42-month high, while Britain saw factory activity expand at its fastest pace in 15 months, supported by a recovery in demand. Economists warned, however, that euro zone manufacturers remain cautious heading into 2026, as slowing demand and subdued confidence continue to weigh on output and investment.

In contrast, Asia’s factory powerhouses closed the year on a stronger footing, supported by a rebound in exports and rising demand for artificial intelligence-related products. Manufacturing activity in Taiwan and South Korea returned to expansion territory in December after months of decline, driven by a surge in new orders. Most Southeast Asian economies maintained solid growth, while China also showed signs of an unexpected turnaround, reinforcing optimism that Asia’s export-driven manufacturing sector may start the new year with renewed momentum.

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