Eurozone manufacturing sector closes 2024 in contraction

The eurozone manufacturing sector faced a sharper downturn in December, ending the year with most indexes in contraction, according to a report released on Thursday.

The eurozone manufacturing Purchasing Managers' Index (PMI) dropped to a three-month low of 45.1 in December, extending its two-and-a-half-year downward trend.

New orders, output, purchasing activity and inventories of inputs all fell in December.

Commenting on the PMI data, Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, stated: “New orders have fallen even more sharply than in the previous two months, dashing hopes for a swift recovery. This is further supported 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."

He added that 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.

On the other hand, business confidence saw a modest improvement as growth expectations hit a four-month high.