The private sector in the Eurozone returned to growth in January 2025 after two months of contraction, driven by improved conditions in manufacturing, according to the PMI Flash index released by S&P Global.
The index rose to 50.2 from 49.6 in December. A reading above 50 indicates growth, while a figure below 50 reflects contraction.
Cyrus de la Rubia, an economist at Hamburg Commercial Bank (HCOB), noted, "The Eurozone's private sector showed relatively encouraging results at the start of 2025. The latest PMI Flash data indicates a slight recovery in expansion after two consecutive months of contraction."
The improvement was largely supported by Germany, where overall activity rebounded at the beginning of the year, while France continued to report contraction in the private sector, albeit less severe than in previous months.
Overall, the better dynamics in the Eurozone stem from an improvement in the manufacturing sector. "The industrial recession persisted at the start of the year, but the contraction eased slightly compared to December," de la Rubia emphasized. This contraction reached its lowest level since May 2024.
Service sector activity increased for the second consecutive month in January, although at a moderate pace and slightly lower than in December.
Bert Colijn, an economist at ING, remarked, "Finally, some positive news from the Eurozone. It's not huge, but a slight increase in the PMI index above 50 is still something." However, Jack Allen-Reynolds from Capital Economics stressed the ongoing weakness in the European economy, forecasting GDP growth of only 0.1% in the last quarter of 2024 compared to the previous quarter and an equally mediocre performance for the first three months of 2025.