The HCOB Eurozone Manufacturing PMI registered 48.6 in March 2025, slightly below the preliminary estimate of 48.7 but improving from February’s final reading of 47.6.
Eurozone manufacturing downturn eases in March
While the index remained below the 50.0 threshold, indicating an ongoing contraction in the manufacturing sector, the downturn was modest and the slowest since January 2023. The latest data suggests that manufacturing conditions in the eurozone are stabilizing, with some positive developments emerging despite persistent challenges.
Notably, output expanded for the first time in two years, growing at the fastest pace since May 2022. This improvement occurred even as new business volumes declined for another month, reflecting weak demand in both domestic and export markets. However, the sustained fall in backlogged work—though at the slowest pace since July 2022—suggests that manufacturers are still relying on order backlogs to support production levels.
Employment conditions improve
Employment conditions also showed signs of improvement, as job cuts eased from February’s four-and-a-half-year high, marking the softest rate of workforce reduction in seven months. This suggests that firms may be becoming more cautious about reducing staff levels, anticipating a potential recovery in demand.
On the pricing front, input cost inflation climbed to a seven-month high, driven by rising raw material costs and supply chain pressures. However, output price inflation remained marginal, indicating that manufacturers are absorbing higher costs rather than passing them on to customers, likely due to competitive pressures and subdued demand.
Business confidence dips
Despite these signs of stabilization, business confidence dipped to a three-month low, reflecting lingering concerns over economic uncertainty, global trade disruptions, and geopolitical risks. While the sector appears to be moving toward recovery, manufacturers remain cautious about the outlook for the coming months, awaiting clearer signals of sustained demand growth.
