Investor sentiment on Germany's economic outlook unexpectedly rose to less gloomy territory in May following two consecutive months of strong declines, the Centre for European Economic Research, or ZEW, said Tuesday.
The ZEW Indicator of economic sentiment in Germany climbed to -10.2 points in May from -17.2 points in April, beating the consensus estimate of -19.8 points. ZEW, which surveyed 188 analysts and institutional investors between May 4 and May 11, evaluated the current economic situation as worse, with the related indicator down to -77.8 points from the previous -73.7 points and the expected -77.5 points.
"The financial market experts are hoping that the Iran war will end soon," ZEW President Achim Wambach said. "Nevertheless, weak industrial production, rising energy prices and an inflation rate that exceeds the two-percent mark continue to burden the German economy. There is cautious hope for a potential recovery in the second half of 2026, provided that the Middle East conflict eases and the government's economic stimulus measures are having an effect."
Across the industry, the expectations index for the automotive sector deteriorated by 13 points to -57.2 points, while that for mechanical engineering dropped 9.2 points to -32.1 points. At the same time, the outlook for the metal production sector, the construction industry, and the information technology industry brightened, with the latter rising 12.1 points to 56.6 points.
Across the wider euro area, the economic expectations indicator jumped to -9.1 points in May from -20.4 points in April, exceeding the consensus estimate of -20 points. Meanwhile, the current situation indicator increased by 1.6 points to -41.4 points.
