December PMI figures suggest that the eurozone ended 2025 with stability, but little momentum. Growth continued across the private sector, yet the pace slowed and became more uneven, reinforcing concerns about the depth and durability of the recovery.
According to the HCOB Eurozone Composite PMI, private sector output rose for a twelfth consecutive month in December, but at its weakest rate since September. The Composite PMI Output Index slipped to 51.5, down from 52.8 in November, pointing to a cooling of activity after a stronger autumn. Even so, the final quarter of 2025 still delivered the strongest average growth since the second quarter of 2023, indicating that December marked a loss of speed rather than a renewed downturn.
The deceleration was driven primarily by the services sector. While service activity remained in expansion, growth eased, and new business increased more slowly, becoming increasingly reliant on domestic demand. Export-oriented services weakened notably, with new export business contracting at the sharpest rate since September. Manufacturing continued to weigh on overall performance, with factory orders declining further and contributing to the weakest increase in total new business since early autumn.
Labour market trends remained relatively resilient at the eurozone level. Employment continued to rise, supported by services, while manufacturing headcounts declined again. At the same time, softer demand allowed firms to reduce outstanding work more quickly, with backlogs falling at the fastest pace in three months, pointing to easing capacity pressure rather than growing strain.
Cost dynamics, however, became less favourable. Input cost inflation accelerated to a nine-month high across both manufacturing and services, while output price inflation remained subdued and unchanged from November. This combination signals limited pricing power despite rising costs, a pattern consistent with the more cautious tone seen in business confidence surveys, particularly among service providers.
United Kingdom: marginal growth, weak demand base and rising cost pressure
UK economic activity remained in slight expansion in December, but momentum stayed weak and uneven. The Composite PMI Output Index edged up to 51.4, pointing to continued but fragile growth driven more by short-term factors than by a sustained recovery in demand.
Manufacturing output increased for a third consecutive month, with the PMI rising to 50.6, its highest level in 15 months. However, growth was largely driven by inventory buildup and backlog clearance rather than by stronger new orders. While domestic demand showed tentative improvement, export orders continued to fall, underlining persistent weakness in cross-border demand relevant for international haulage. Manufacturing employment declined again, albeit at a slower pace, suggesting excess capacity remains in the system.
The services sector also expanded only marginally, with activity well below its long-term average. A modest rebound in new business offered some support, including limited improvement in export demand, but employment continued to fall for the fifteenth consecutive month. Rising wage and fuel costs pushed input price inflation higher, while firms reported limited ability to pass these costs on, pointing to ongoing margin pressure across the supply chain.
Overall, December data indicate stability rather than acceleration in the UK economy. For transport and logistics, demand is no longer deteriorating, but the recovery lacks breadth, while cost pressures continue to limit margin recovery.
Germany: manufacturing-led slowdown weighs on freight demand
Germany’s private sector expansion slowed further in December, confirming a loss of momentum at year-end. The Composite PMI Output Index fell to 51.3, its lowest level in four months, as renewed weakness in manufacturing offset continued, though easing, growth in services.
Manufacturing conditions deteriorated more sharply, with the Manufacturing PMI dropping to 47.0, signalling a return to contraction after nine months of output growth. Production declined for the first time since February, driven primarily by falling export orders, which dropped at the fastest pace in a year. Employment cuts in manufacturing accelerated, while purchasing activity and input stocks were reduced further, indicating subdued near-term transport volumes.
By contrast, the services sector remained in expansion, though at a slower pace. The Services PMI eased to 52.7, reflecting softer growth in new business and weakening confidence. While services firms reported a modest rise in export orders for the first time in over a year, this was insufficient to offset manufacturing-led pressure on overall demand. Backlogs fell again, suggesting limited strain on capacity.
Input costs rose across both sectors, with manufacturers reporting their first increase in purchase prices in almost three years, while services firms faced continued wage-driven cost pressure. Pricing power remained limited, particularly in manufacturing, where output prices continued to fall. Overall, Germany’s slowdown is being driven by industrial and export weakness, with continued pressure on cross-border freight volumes.
France: export-driven manufacturing rebound offsets stagnant services
France’s private sector ended 2025 in near-stagnation, with a modest manufacturing rebound offset by flat services activity. The Composite PMI Output Index stood at 50.0 in December, following mild growth in November and confirming a lack of underlying momentum.
Manufacturing provided the main positive signal. The Manufacturing PMI rose sharply to 50.7, returning to expansion for the first time in three months. This improvement was driven primarily by a surge in export orders, which rose at the fastest pace in almost four years, particularly to other European markets and North America. Output stabilised after November’s contraction, while employment increased at the quickest pace since August. However, firms continued to cut purchasing activity and inventories, indicating caution and limited confidence in sustained demand.
By contrast, the services sector lost momentum, with activity broadly unchanged in December. New business stagnated and export demand fell sharply, marking the weakest performance in international services sales for over a year. Employment remained flat and backlogs continued to decline, pointing to spare capacity and subdued domestic demand conditions.
Cost pressures in France were relatively contained compared with other major eurozone economies. Input cost inflation remained historically low in services and eased in manufacturing, allowing firms to keep output prices largely stable. Weak pricing power and fragile demand, however, continue to limit margin recovery.
Spain: services strength drives growth as manufacturing weakens
Spain remained the strongest performer among major eurozone economies in December, although growth was increasingly uneven across sectors. The Composite PMI Output Index rose to 55.6, reflecting a sharp acceleration in services that more than offset a downturn in manufacturing.
The services sector continued to expand at a robust pace, with the Services PMI climbing to 57.1, its highest level in 12 months. Growth was supported by rising domestic demand and a moderate rebound in export sales, including from key European markets. Employment increased at a faster rate, helping firms manage workloads, although rising wage, fuel and energy costs pushed operating expenses higher and led to further increases in service prices.
By contrast, manufacturing slipped back into contraction. The Manufacturing PMI fell to 49.6, ending an eight-month expansion streak. Output and new orders declined simultaneously, driven in part by a sharp drop in export demand, marking the steepest fall in new export orders since April. Manufacturers responded by cutting purchasing activity and reducing employment, pointing to weaker freight demand linked to industrial supply chains.
Overall, Spain’s December data underline a clear sectoral divergence. Domestic and service-related flows remain strong, while industrial and export-oriented freight shows signs of softening, despite improved business confidence.
Italy: manufacturing slips back into contraction as demand remains fragile
Italy’s private sector ended 2025 with very limited momentum, as renewed weakness in manufacturing offset only marginal stability elsewhere, leaving the country among the weakest-performing major eurozone economies.
Manufacturing conditions deteriorated again, with the Manufacturing PMI falling to 47.9, down sharply from November’s brief return to expansion. Both output and new orders declined, with production contracting at its fastest pace in nine months. Export orders also fell, confirming that November’s rebound was short-lived, although the pace of decline in foreign demand was milder than earlier in the year.
Manufacturers responded by cutting employment, reducing purchasing activity and running down inventories. Backlogs fell rapidly, pointing to ample spare capacity and limited pressure on transport networks. Softer demand helped ease cost pressures, allowing firms to offer modest price discounts, but this also underlines weak pricing power and fragile margins.
Despite the deterioration in current conditions, business confidence improved slightly, supported by plans for new product launches and market expansion over the coming year. Near-term demand conditions, however, remain weak.
Poland: manufacturing contraction deepens, but recovery expectations strengthen
Poland’s manufacturing sector ended 2025 still in contraction, with demand conditions weakening slightly in December. The Manufacturing PMI slipped to 48.5, remaining below the 50 threshold for an eighth consecutive month.
Both output and new orders fell at a faster pace, extending the downturn in production to eight months. Export demand also weakened again after a brief improvement in November, with firms citing softer conditions in key Western European markets, notably Germany and France. This continues to weigh on cross-border freight flows linked to Polish manufacturing supply chains.
Despite weaker current conditions, adjustment on the supply side remained measured. Employment declined only modestly, purchasing activity was reduced marginally, and backlogs fell slightly, suggesting capacity is broadly aligned with subdued demand. Inflationary pressures remained muted, with output prices falling again.
Importantly, business confidence improved sharply, with manufacturers reporting their strongest optimism since March. Firms linked this to expectations of market recovery, new customers and internal development projects, suggesting Poland could be positioned for a gradual manufacturing-led pickup once external demand strengthens.
