Economic growth across the euro zone eased in December but still delivered the region’s strongest quarterly expansion since mid-2023, according to purchasing managers’ index data released on Tuesday. The composite PMI slipped from the previous month, reflecting slower momentum at year-end, though it remained above the threshold that signals expansion. Services activity continued to drive growth, offsetting persistent weakness in manufacturing.

The data showed uneven performance across member states, with southern European economies recording stronger services growth while industrial-heavy economies faced subdued output. Analysts said domestic demand and tourism helped sustain overall activity, even as export orders softened. Businesses reported cautious optimism as they entered the new year.

Manufacturing remained under pressure, with firms citing weak global demand and lingering supply-chain challenges. New orders declined in several core economies, highlighting the sector’s ongoing struggle to regain momentum. By contrast, services firms reported steady demand and modest job creation.

Employment across the bloc showed slight improvement, although companies remained wary of rising labour and input costs. Inflationary pressures eased marginally, providing some breathing room for policymakers assessing the economic outlook. The European Central Bank continues to monitor these developments closely.

Economists expect moderate growth to continue into early 2026, supported by services and consumer spending. However, they caution that a sustained recovery will depend on improvements in industrial output and external demand.

Source: Reuters.