Demand for euro area goods also saw fresh signs of weakness as new orders fell at the quickest pace in almost a year. Worsened sales performances came despite continued discounting, even as the rate of input cost inflation ticked up to a 16-month high.

Nevertheless, surveyed business were their most optimistic towards the year-ahead outlook since immediately prior to Russia's full-scale invasion of Ukraine in February 2022.

The HCOB Eurozone Manufacturing PMI, a measure of the overall health of the eurozone manufacturing sector compiled by S&P Global, declined in December to 48.8, from 49.6 in November, taking it further below the 50.0 no-change mark and therefore indicating a sharper deterioration in factory operating conditions.

Furthermore, the final month of the year brought with it the lowest reading of the headline index since March 2025, although the contraction signalled was only mild overall. Manufacturing performances worsened in a number of key euro area economies during December.

After nine successive months of growth, factory production volumes across the eurozone decreased in December. Eurozone manufacturers retrenched during the final month of the year.

Purchasing activity was cut to the strongest extent since March last year, while stocks of raw materials and intermediate goods fell solidly.

Notably, there was growing evidence of supply-chain pressure for eurozone manufacturers. As for employment, factory job losses were extended into the final month of 2025, stretching the current sequence of decrease to just over two-and-a-half years.

Backlogs of work were nevertheless reduced, indicating adequate capacity to process new and existing business requirements.

Lastly, manufacturers' sentiment towards the year-ahead outlook for production improved in December.

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