Eurozone's economic growth stalls as Germany rises and France falls
The eurozone's industry experienced minimal growth in economic activity in February 2025, maintaining the same pace as at the start of the year. The Composite PMI Output Index stayed at 50.2. New orders continued to decline, and employment fell once more. Notably, Germany stood out.
In February 2025, economic activity in the eurozone saw a slight uptick, primarily due to the services sector. The HCOB Flash Eurozone Services PMI Business Activity Index decreased from 51.3 in January to 50.7, hitting the lowest level in three months. This sector has marked growth for the third consecutive month.
Conversely, the manufacturing sector continued to experience a decline in production, although the rate of this decline was the slowest since May 2024. The Manufacturing PMI Output Index eventually reached 48.7.
Germany's growth, France's marked decline
These statistical figures, however, do not entirely capture the situation across Europe. The explanation is straightforward: differences among eurozone countries were significant. Germany accelerated economic activity growth to its highest level in nine months, whereas France encountered a notable decline, the most severe in almost a year and a half. The rest of the eurozone demonstrated solid production growth. The decrease in new orders persisted for the ninth consecutive month, albeit slightly faster in February compared to January, affecting both services and manufacturing.
Price pressure and employment
Costs in the eurozone rose in February 2025 at the fastest rate since April 2023—largely due to the services sector, where inflation remained high. In the manufacturing sector, purchase prices increased for the second straight month, marking the fastest rate in six months, though still moderate. As a result, the inflation of selling prices accelerated to the highest level in ten months, with a noticeable rise in the services sector and a slight decline in manufacturing.
Employment in the eurozone decreased at a quicker pace in February than in January. February marked the seventh consecutive month of decline. In the manufacturing sector, job reductions were the most significant in four and a half years, while services saw a modest rise in employment. Once again, the diversity of the European market became apparent. Germany and France reported a drop in employment, with a quicker pace in France, whereas the remainder of the eurozone experienced the fastest employment growth in five months.
Companies' expectations for future economic activity weakened in February to the lowest level in three months, staying below average. Sentiments deteriorated in both the services sector and manufacturing. In Germany, optimism fell below average, while in France, the balance between optimists and pessimists was minimal. Yet the rest of the eurozone maintained strong confidence in the future.
Germany, the largest eurozone economy, stands out in the region due to stable economic activity growth in February 2025. The country showed improvements in the services sector and a milder decline in manufacturing, contrasting with France's struggles. Upcoming federal elections may further impact future expectations and Germany's economic stability.
