According to the final report from HCOB, business activity in the manufacturing sector of the eurozone continued to contract in April, but reached its highest level since March 2022. Production growth accelerates as demand for euro area goods nearly stabilises, but confidence in the manufacturing sector was the weakest in 2025 so far.
The eurozone manufacturing PMI rose to 49.0 points in April from 48.6 points in March. An index value below 50 points indicates a reduction in activity in the sector. Economists had expected an increase to 48.7 points.
HCOB said that the improved performance was mainly driven by a stronger increase in factory output. The pace of production growth was the quickest since early 2021, signaling renewed momentum in the eurozone’s industrial economy. However, this output growth came despite continued weakness in demand. New orders fell again in April, although the rate of decline slowed significantly. The HCOB New Orders Index hit a three-year high, coming close to the neutral 50.0 level, suggesting demand is nearing a turning point.
Export markets remained a weak spot. New orders from overseas customers declined at a faster pace than overall new business. Still, the contraction in foreign demand was the shallowest recorded since April 2022, hinting at potential stabilization in global trade conditions.
Other indicators also pointed to a slow but ongoing recovery. Employment in the manufacturing sector continued to fall, marking nearly two years of job losses. However, the rate of job shedding was the weakest in ten months. Purchasing activity and inventories of both raw materials and finished goods also declined, though again, at slower rates. Backlogs of work were cleared at a quicker pace, while supplier delivery times improved, showing the largest gain in ten months.
Cost pressures eased for manufacturers in April. Input prices fell for the first time since last November, reflecting better supply conditions and possibly easing global commodity prices. Despite this, output charges rose more sharply, with inflation reaching a two-year high, suggesting some firms are passing higher costs onto customers. Business sentiment, however, took a hit. Confidence among eurozone manufacturers dropped to its lowest level so far in 2025, reflecting ongoing uncertainty around global demand, geopolitical risks, and inflationary pressures.