The euro area’s economic expansion lost significant steam in December 2025, according to the latest HCOB Flash Eurozone Composite PMI survey compiled by S&P Global. The benchmark index dropped to a three-month low of 51.9, markedly below November’s 2.5-year peak of 52.8 and undershooting Reuters’ consensus forecast of 52.7.
While the reading remains above the critical 50.0 threshold separating expansion from contraction—marking the first full calendar year above this level since 2019—the deceleration signals mounting headwinds. The manufacturing sector’s deterioration intensified, with its PMI sliding to 49.2 from November’s 49.6, representing the lowest reading since April. Particularly concerning was the contraction in manufacturing output for the first time in ten months, accompanied by the fastest decline in new orders since February.
The services sector, previously the engine of growth, demonstrated diminished momentum with its PMI retreating to 52.6 from a 2.5-year high of 53.6 in November. This performance likewise fell short of economist expectations. Despite the broad slowdown, employment continued to expand at an accelerated pace across the currency bloc.
Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, attributed the weaker performance primarily to intensified downturn in German industry, while noting tentative signs of cautious recovery in French manufacturing. “All in all, the runway into the new year seems pretty unstable,” de la Rubia commented, adding that “a real upturn will only succeed if the manufacturing sector regains its footing.”
Concurrently, price pressures intensified with input costs rising at the most rapid pace since March, prompting firms to increase output charges more aggressively. This development occurs alongside slightly elevated headline inflation that nonetheless remains proximate to the European Central Bank’s 2% target. Separate Reuters polling indicates expectations that the ECB will maintain current interest rates at least through 2027.