The eurozone manufacturing sector exhibited signs of stabilization in January, with the final HCOB manufacturing Purchasing Managers' Index (PMI) rising to 46.6, up from 45.1 in December, according to S&P Global.
While remaining below the critical threshold of 50.0, this marks the softest contraction since May 2024. The decline in output and new orders slowed, contributing to a more optimistic outlook among manufacturers.
Germany's manufacturing downturn softened, with its PMI improving to 45.0 from 42.5, reflecting the slowest rate of decline in eight months. France also saw its PMI rise to 45.0, indicating some recovery in conditions. However, Italy's sector continued to contract, albeit at a slightly improved rate.
Despite ongoing tariff threats from the U.S., manufacturers in the eurozone remain focused on non-U.S. export markets, which account for the majority of their sales. Overall, the January data suggests cautious optimism as firms navigate challenging conditions.