Manufacturing PMI – June 2025: First Signs of Stabilization in Europe Versus the UK

The June 2025 release of the Manufacturing Purchasing Managers’ Index (PMI) for the Eurozone, Germany, and the United Kingdom provides vital insights into the state of industry across Europe. A comparative analysis of these key economies reveals meaningful divergence in momentum and offers a forward-looking perspective on regional manufacturing performance for the remainder of the year.

Eurozone: Positive Surprise, but Still Below Growth Threshold

The Eurozone Manufacturing PMI for June 2025 came in at 49.4, marking an increase from the previous reading of 49.0 and surpassing market expectations, which stood at 48.4. Although this print remains below the critical 50-point threshold—signifying ongoing contraction in industrial activity—the data signal a moderation in the rate of decline. In effect, the Eurozone’s manufacturing sector continues to shrink, but at a slower pace, suggesting the early stages of potential stabilization.

According to S&P Global, which compiles the index, this improvement can be attributed to easing supply chain pressures and a softer decline in new orders. The June figure marks the highest level since the start of 2025, indicating that the Eurozone may be approaching an inflection point, provided that momentum continues in the coming months.

Germany: Manufacturing Contraction Deepens

The situation in Germany—the Eurozone’s largest economy—remains more challenging. The German Manufacturing PMI dropped to 48.3 in June 2025, below both the forecast of 48.8 and last month’s result of 48.4. This decline underscores a deepening contraction in Germany’s manufacturing sector, diverging from the broader Eurozone’s trend of gradual improvement.

Key factors behind Germany’s persistent weakness include subdued domestic and international demand, lingering geopolitical uncertainty, and elevated energy costs, which continue to weigh on the profitability of exporters and manufacturers. As a heavily export-dependent economy, Germany is particularly sensitive to global supply chain disruptions and increased competition from East Asia. Core sectors such as automotive, machinery, and industrial equipment are experiencing ongoing order declines and production cuts.

United Kingdom: A Surprising Upswing, Yet Still Subdued

The latest data from the UK Manufacturing PMI showed a notable increase to 46.4 in June 2025, outperforming both the consensus forecast of 45.1 and the prior month’s reading of 45.4. While the index remains firmly below the growth threshold of 50, the reading represents the third consecutive monthly improvement—a trend not observed since mid-2023.

Market analysts attribute the rise in the UK’s PMI to gradually stabilizing domestic demand, moderate inventory improvements, and a reduction in policy and economic uncertainty. While the current level continues to indicate contraction, the steady upturn suggests the worst phase of the downturn may be nearing its end.

Eurozone, Germany, and the UK: Contrasting Signals, Shared Challenges

A side-by-side comparison of these three economies reveals both divergence and commonality. The Eurozone is leading in terms of relative improvement, with its PMI at 49.4, inching closer to the expansionary threshold. In contrast, Germany is experiencing a renewed acceleration in contraction, with a PMI of 48.3. The UK stands out for its sharpest month-on-month increase—a 1.0-point gain—though its absolute index level remains the lowest among the three, still well under 47.

From a currency perspective, the better-than-expected Eurozone figure may lend modest support to the euro (EUR), although ongoing German weakness acts as a counterweight. In the UK, the positive surprise in the PMI may help stabilize the British pound (GBP), but with the index still in contraction territory, caution prevails among FX traders.

Looking Ahead: Is a Turning Point Approaching?

The latest PMI data highlight stark differences in the pace of recovery and headwinds facing Europe’s major industrial economies. While the Eurozone shows the first signs of stabilization, the improvement remains fragile and preliminary. Germany, traditionally the engine of European growth, continues to lag and serves as a warning that the road to sustained recovery may still be long. The UK, meanwhile, delivered a positive surprise this month, but a consistent uptrend across multiple readings will be required to confirm any real change in direction.

In summary, the manufacturing sectors of the Eurozone, Germany, and the UK have yet to return to robust, sustainable growth. However, the moderation in contraction rates, especially in the Eurozone and the UK, lays the groundwork for possible stabilization in the second half of 2025.
Market participants, policymakers, and investors will be watching subsequent data releases closely, seeking confirmation that this tentative turnaround can develop into a full-fledged recovery—starting with a broad-based rebound in industrial activity.