Significant Rise in the ZEW Indicator of Economic Sentiment

After the ZEW Indicator of Economic Sentiment in Germany slumped in April 2025, it has significantly improved again in May: At 25.2 points, the indicator is 39.2 points above the previous month’s reading and thus clearly in the positive range. The assessment of the current economic situation has remained essentially the same, with the indicator for Germany declining by minus 0.8 points and settling at minus 82.0 points. As before, this is the lowest reading among all the countries analysed and the eurozone.

“Expectations are brightening. The ZEW indicator sees a major improvement in May 2025 and compensates for part of the losses observed in the April survey. With a new government in place, some progress in the tariff disputes and a stabilising inflation rate, optimism has increased,” comments ZEW President Professor Achim Wambach, PhD on the survey results.

In almost all industries, sentiment has improved in the May survey. The outlook has improved in particular for the banking industry and export-intensive sectors such as the automobile and chemical industries, as well as metal, machine and steel production. The most recent interest rate cut by the ECB and anticipated future rate cuts have a positive effect particularly for the construction industry. The respondents also expect domestic demand, which has been subdued lately, to pick up on a six-month horizon and boost the German economy, which is currently stagnating.

The sentiment concerning the economic development in the eurozone is strongly on the rise as well: Increasing by plus 30.1 points, it is currently at 11.6 points and thus in the positive range. The assessment of the current economic situation in the monetary union has also improved, albeit less markedly. At minus 42.4 points it is plus 8.5 points above the April reading.