German economic sentiment is showing a mixed picture. According to the Centre for European Economic Research (ZEW), Germany’s economic expectations for May 2026 improved considerably, climbing by 7.0 points to reach a reading of -10.2 points compared to the previous month.
However, the assessment of the current economic situation declined sharply, falling 4.1 points to settle at -77.8 points.
Commenting on the figures, ZEW President Achim Wambach noted that while expectations are brightening, they remain in negative territory. He warned that persistent drags on the German economy-including weak industrial production, rising energy costs, and inflation above the two percent mark-are concerns. Nevertheless, he offered a cautiously optimistic long-term view, suggesting that a recovery potential exists in the second half of 2026, provided that the instability in the Middle East cools down and government stimulus efforts reach their intended effect.
The analysis of various economic sectors also revealed disparate trends. Some areas suffered substantial downturns. The auto industry saw a significant deterioration, with its balance dropping 13.0 points to -57.2 points. Mechanical engineering also declined, recording a fall of 9.2 points, putting its index at -32.1 points. Furthermore, private demand continued its slide, falling 8.2 points from April to reach -41.6 points.
Conversely, several sectors posted improvements. Prospects for information technologies brightened notably, rising 12.1 points to reach a balance of 56.6 points. Increases were also registered in metal production and the construction industry.
On the international front, overall expectations for the Eurozone saw a robust jump in May, rising 11.3 points from April, reaching a balance of -9.1 points. The evaluation of the Eurozone’s current situation improved marginally by 1.6 points, settling at -41.4 points.