Global Manufacturing Trends: Asia Shows Resilience Amid European Contraction

Divergent Manufacturing Performance

The global manufacturing landscape presented a mixed picture in December 2025, with significant divergence between major economic regions. The European manufacturing sector continued to contract, while Asian manufacturing showed clear signs of recovery ¹

European Manufacturing Challenges

The S&P Global's Eurozone Manufacturing PMI declined to 48.8 in December, down from 49.6 in November. This reading represents the lowest level in nine months and marks the second consecutive month below the critical 50 threshold that separates expansion from contraction. The weakness was widespread across the 20 Eurozone member states, with Germany - the region's largest economy - recording its weakest performance among the eight monitored countries, hitting a 10-month low ¹

Italy and Spain also re-entered contraction territory, adding to the region's manufacturing woes. According to Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, "Demand for Eurozone manufactured goods slowed again," with companies showing reluctance to build momentum for the coming year, instead adopting a cautious stance that could further dampen economic activity.

Asian Manufacturing Recovery

In stark contrast to Europe, Asian manufacturing demonstrated resilience and signs of recovery. Factory activity in key technology exporters like South Korea and Taiwan rebounded in December after months of decline. Most Southeast Asian nations maintained robust growth, supported by China's unexpected manufacturing expansion driven by a surge in pre-holiday orders ¹

The recovery in Asia was primarily fueled by rising export orders and increasing demand for artificial intelligence-related products. While it's still early to confirm whether major Asian exporters have fully adapted to the US tariff policies, the improving demand signals provided some optimism for the manufacturing sector entering the new year.

Regional Comparison and Future Outlook

The divergent performance between European and Asian manufacturing highlights the complex global economic landscape at the close of 2025. While European manufacturers grappled with weakening demand and contraction, their Asian counterparts found support in recovering export orders and technological demand. This regional disparity underscores the need for nuanced economic policies tailored to specific market conditions.