Eurozone factory activity stalls in January as output rebounds
Eurozone factory activity stalls in January as output rebounds
Eurozone manufacturing remains in contraction in January, but output rebounds to modest growth, signaling a fragile, uneven recovery across the bloc.
Factory activity across the eurozone stayed in contraction territory for a third straight month in January, although production returned to modest growth, signaling tentative stabilisation in the region's manufacturing sector.
The HCOB Eurozone Manufacturing PMI rose to 49.5 in January from 48.8 in December, slightly above the flash estimate of 49.4. A reading below 50 indicates contraction. A positive takeaway was the rebound in the manufacturing output index to 50.5 from 48.9 in December, pointing to a return to modest production growth after several months of contraction.
New orders declined for the third consecutive month, highlighting continued weakness in demand. While the pace of decline eased compared with December, subdued order books dragged on overall activity. Employment also remained under pressure, with manufacturers cutting jobs for the 32nd straight month, though the pace of job losses was the slowest since September, suggesting some easing in labour market stress.
There were signs of divergence across eurozone members, underscoring the uneven pace of recovery within the bloc. Analysts note that progress is possible but slow, and that firmer demand will be needed to sustain growth. The data point to a fragile path to recovery, with the headline numbers masking a fragile balance between output gains and demand weakness. Looking ahead, market watchers will be keen to see whether the output rebound can translate into a broader uptrend in activity in the coming months.
