The HCOB Eurozone Manufacturing PMI rose to 49.5 in January 2026, broadly in line with the preliminary estimate of 49.4 and up from December’s nine-month low of 48.8. Despite the improvement, the reading still signaled a third consecutive month of contraction, pointing to a downturn that remained only marginal overall. New orders fell for a third straight month, while output returned to growth after recording its first decline in ten months in December. At the country level, manufacturing conditions improved in Greece, France, and the Netherlands, but deteriorated further in Germany, Italy, Spain, and Austria. Cost-cutting remained a theme at the start of 2026, as firms reduced employment, purchasing activity, and inventories in January. On the inflation side, input cost pressures accelerated to a three-year high, while output prices were largely unchanged. Looking ahead, business confidence strengthened, with expectations reaching their highest level since February 2022.

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