Finance
Euro zone manufacturing returned to contraction in September, PMI shows
Published by Global Banking and Finance Review
Posted on October 1, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 1, 2025
2 min readLast updated: January 21, 2026
Euro zone manufacturing PMI dropped to 49.8 in September, signaling contraction as new orders fell sharply. Employment conditions also worsened.
LONDON (Reuters) -Euro zone manufacturing activity slipped back into contraction in September as new orders fell at their fastest rate in six months, signaling the recovery in the region's industrial sector was fragile, a survey showed on Wednesday.
The HCOB Eurozone Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell to 49.8 in September from 50.7 in August - which was the first reading above the 50.0-point line denoting growth since mid-2022.
"For the seventh month in a row, production in the euro zone has ticked upwards compared to the previous month, but progress has been sluggish," said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank.
However, incoming orders declined in September after a short-lived increase in August, with export markets acting as a particular drag. The decrease in new orders was mild but marked the sharpest fall since March.
Factory output continued to grow, extending its expansion streak that began in March, but the pace slowed considerably from August's strong performance. The index fell to 50.9 from 52.5.
Employment conditions deteriorated further as manufacturers cut jobs at the fastest rate in three months. Companies also made greater progress in reducing backlogs of work, with outstanding orders falling at the steepest pace since June.
The survey revealed a split across the euro zone with the Netherlands leading the expansion at a 38-month high while growth continued in Greece, Ireland and Spain. Meanwhile, the bloc's three largest economies - Germany, France and Italy - all registered contractions.
Input costs fell for the first time since June, albeit marginally, while manufacturers reduced their selling prices for the fifth consecutive month.
Business confidence remained positive but weakened to its lowest level since April and below the average of the past decade.
(Reporting by Jonathan Cable; Editing by Hugh Lawson)
PMI stands for Purchasing Managers' Index, a measure of the prevailing direction of economic trends in manufacturing and service sectors.
New orders refer to the total number of orders received by manufacturers during a specific period, indicating future production levels.
Manufacturing contraction occurs when the manufacturing sector experiences a decrease in production output, often indicated by a PMI below 50.
Business confidence reflects the degree of optimism that business leaders feel about the overall economic situation and their own company's prospects.
Input costs are the expenses incurred by a business to produce goods or services, including raw materials, labor, and overhead.
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