German industry suffers ‘lost year’, helping to set back EU manufacturing

Germany’s beleaguered industrial sector completed a “lost year” with a new decline in December, helping to push back the eurozone manufacturing sector.

French factories also suffered a grim end to 2024, with the worst month since the height of the pandemic, as political chaos rages.

The falls in Europe’s two largest economies, along with Italy, the third player, caused a contraction of the sector throughout the eurozone.

The closely watched Purchasing Managers’ Index (PMI) figures gave a reading of 45.1 on a scale where 50 separates growth from contraction.

Germany recorded 42.5 as it experienced “steep and accelerating declines in both production and new orders” and further job cuts.

Its once powerful industrial base has been in crisis after losing access to cheap energy from Russia as a result of the Ukraine war and a drop in demand from China.

Its giant auto industry has been battling cut-price Chinese imports.

That has led to cost cuts and industrial unrest, such as protests by Volkswagen workers.

And he is in political limbo ahead of elections next month after the collapse of his coalition government.

Cyrus de la Rubia, chief economist at the Commercial Bank of Hamburg, which compiled the latest figures, said: “The situation remains quite bleak. The industry will not emerge from the recession anytime soon.

‘The decline in the order book suggests that the new year will not start much better. It’s been a lost year.’