Eurozone manufacturing outlook dims as energy risks resurface

Brussels – The eurozone’s industrial prospects have become increasingly uncertain as manufacturing output declined in January 2026 and surging energy prices resulting from Middle Eastern conflict threaten to derail the fragile recovery of the eurozone’s manufacturing sector, according to analysis by ING, a Dutch-based multinational financial institution, on Friday (13 March).

Eurozone industrial production fell 1.5 per cent month-on-month in January, following a decline of 0.6 per cent in December. January’s figure represents the lowest level of industrial output since December 2024, indicating that recent optimism among manufacturers has yet to be reflected in actual production data, the analysis stated.

A sharp decline in industrial production in Ireland contributed significantly to the contraction in January. However, the slowdown was not limited to Ireland. Germany, Italy, and Spain also reported lower production compared to December, the analysis noted.

Although industrial activity for much of last year remained above 2024 levels, the latest data indicates that the sector is losing momentum.

Bert Colijn, ING’s chief economist, cautioned that prolonged energy price increases could damage the recovery prospects of energy-intensive industries, which have struggled since the 2021–2022 energy shock.

Colijn stated that whilst some sectors have managed to remain relatively resilient amid previous energy shocks, rising energy costs continue to pose a significant threat to the manufacturing sector and diminish broader recovery expectations.

As confidence begins to return to the manufacturing sector, resurgent geopolitical tensions have reintroduced significant downside risks to the eurozone’s industrial outlook, he added.