The HCOB Eurozone Manufacturing PMI inched higher to 49.0 in April 2025, up from 48.6 in March and marking the softest pace of contraction in factory activity in over two years.
Eurozone manufacturing PMI revised higher
The reading was also revised upward from the preliminary estimate of 48.7, suggesting a more favorable underlying momentum in the sector than initially anticipated. Although the PMI remained below the neutral 50 mark—indicating ongoing contraction—the latest figures point to a gradual stabilization following a prolonged period of industrial weakness across the bloc.
New orders continued to fall in April, driven primarily by a sharp decline in export demand. The recent appreciation of the euro weighed heavily on competitiveness, making Eurozone goods more expensive on global markets. This, combined with growing concerns over a renewed trade war between the United States and China, dampened external demand and introduced a new layer of uncertainty for manufacturers relying on global supply chains and international clients.
Despite the continued softness in new business, factories reported a notable increase in output, which rose at the fastest pace in three years. This was largely supported by efforts to clear backlogs of work and an emerging sense of stability in domestic demand. The near-stabilization in order flows, while still tentative, encouraged firms to boost production in anticipation of a potential upturn in the second half of the year.
Labor mood was more cautious
On the labor front, the mood was more cautious. The persistent risk of retaliatory tariffs from the U.S. and geopolitical friction led many firms to scale back hiring plans or implement modest headcount reductions. This marked the fourth consecutive month of employment decline in the manufacturing sector, albeit at a relatively moderate pace, as companies sought to maintain flexibility in a still-volatile environment.
Price dynamics also reflected shifting supply-demand conditions. Faster supplier delivery times—typically a sign of reduced strain in the supply chain—coincided with the first drop in input costs since November 2024. The easing of raw material prices offered some relief to producers, although output prices, or charges passed on to customers, rose at the fastest rate in two years. This uptick in selling prices suggests that some firms are regaining pricing power, possibly due to improved product differentiation or higher value-added services.
Overall, the data paints a cautiously optimistic picture for Eurozone manufacturers. While challenges remain—particularly on the trade and currency fronts—the easing in contraction, rebound in output, and moderating cost pressures offer early signs that the worst of the industrial downturn may be over. However, sustained recovery will likely depend on improvements in global demand, currency stability, and clearer signals regarding trade policy developments.
