Eurozone December final manufacturing PMI 45.1 vs 45.2 prelim

January 02, 2025 at 09:00AM

Prior 45.2

It’s a marginal revision lower with the reading being the lowest in 3 months. The output index falls further to 44.3 though, down from 45.1 in November. And that marks its lowest reading in 14 months. Pain. Overall, it reaffirms further struggles in Germany and France mostly with the former still weighing heavily on the manufacturing state in the region. Weak demand conditions are not helping whatsoever but the worry now is that all of this might start to hit at employment even more profoundly in 2025. HCOB notes that:

“Even in December, the manufacturing sector is not delivering any holiday cheer. It is the same old story – downward. New
orders have dropped even more than in the previous two months, crushing any hopes for a quick recovery. This view is
backed by the accelerated decline in order backlogs.
“A sign of the industry’s recovery will be when companies start rebuilding their inventories of intermediate goods, but
December showed no signs of this happening. Instead, inventories were reduced at a very fast rate again. Companies also
sped up the depletion of their finished goods inventories, clearly expecting continued weak demand.

“Manufacturers are still cutting jobs. Although the pace of job trimming slowed slightly in December, it is still relatively high,
and this trend is likely to continue well into the new year given all the news about companies restructuring.

“Within the eurozone, Spain is doing its own thing. Its manufacturing sector continued to expand robustly at the end of the
year, while the three largest eurozone countries – Germany, France, and Italy, which are Spain’s top three export
destinations – are stuck in an industrial recession. Spain has the advantage of being less exposed to China, with only 2% of
its exports going there. Lower energy costs have also helped Spain weather the crisis better. However, Spain, accounting for
only about 12% of the eurozone’s GDP, won’t be able to pull the entire eurozone economy back up on its own.”

This article was written by Justin Low at www.forexlive.com.