The article is devoted to the assessment of the dynamics of the European industry with the special attention to the manufacturing sector as one of the economic development factors. It has demonstrated that not all pan-European objectives are implemented and correspond to emerging challenges despite the EU long-standing strategic goals. Main tendencies and imbalances of the EU manufacturing are analysed primarily based on statistical analysis tools and “case study”. The dynamics of the factors influencing the sector competitiveness indicates its difficult position and partial lack of competitiveness in relation to the USA. Problems of decreasing labour productivity growth rate and negative effects of the energy factor remain. The EU is still characterised by the significant gap with the USA by the level of labour productivity as well as by energy cost for industrial consumers, that actualises the problem of industry relocation outwards the integration union. Territorial transformations take place: along with the general decrease of the sector share in the EU economy and its key states, the opposite tendencies new industrial centers are observed. The foreign capital impact on the European manufacturing and its special importance for individual states is demonstrated.