It has to happen at some point – a turnaround in the eurozone manufacturing sector, and we think we’ll see it next year. It’s been struggling since 2022 on the back of high energy prices, a strengthening euro, intensifying Chinese competition and the trade war. While headwinds from the latter have not disappeared, and some, of course, are structural, both oil and natural gas prices have declined by more than 20% since the beginning of 2025. In addition, Germany intends to significantly lower electricity costs for energy-intensive industries, providing additional breathing space.
On the demand side, we must not forget that the remaining money from the EU’s recovery fund must be spent in 2026, while German infrastructure works and increased military spending will also start to have an impact. Capacity utilisation in manufacturing has already risen throughout the year, which might open the window for some pick-up in business investment next year. All in all, it looks as if manufacturing will see growth in 2026, even if the structural headaches, particularly Chinese competition, seem here to stay.