- Marc-Antoine Dumont
Senior Economist
The Eurozone’s PMI Rebounded, But Growth Remains Fragile
Highlights
- The eurozone’s composite PMI rose from 49.6 in December 2024 to 50.2 in January 2025. But growth was concentrated in manufacturing (+1.0), while the services index pulled back (-0.2).
- The UK composite index also rose 0.5 points and is now at 50.9. Both services (+0.1) and the manufacturing sector (+1.2) made progress.
- The composite PMIs for Japan (+0.6) and Australia (+0.1) also advanced in January.
Comments
Today’s PMI release shows that the eurozone’s manufacturing sector is still in decline. The manufacturing PMI is at 45.1, meaning the index has been in contraction (below the 50-point threshold) for more than two years. This period has been marked by job cuts, especially in Germany’s automotive sector, as well as a decrease in orders. All the same, the index did perk up in January, especially in France (+3.4). This may point to a run-up in economic activity, in anticipation of possible tariffs from the United States and subsequent retaliatory measures from the European Union.
The PMI Service Index did dip by 0.2 points in January, but it’s still above the 50-point-threshold that marks an expansion in economic activity. Services are therefore still holding up. This suggests that the economy is growing, albeit modestly, as 2025 begins.
Implications
Economic difficulties in the euro zone are still concentrated in the manufacturing sector. January’s rise may be temporary, but only time will tell. Today’s numbers do little to change the situation for the European Central Bank, as economic growth remains fragile and uneven. But wage pressures still bear watching.