After declining in April, the ZEW Business Sentiment Index in Germany rose by 39.2 points in the May survey to 25.2, from -14 in April, better than expectations of a rise to 10.7. The index rose in May despite a 0.8-point decline in the assessment of the current economic situation in Germany, to -82, the lowest reading among all eurozone countries.
The improvement in the economic outlook index in Germany is due to the formation of a new government, some progress on the tariff agreement, and a stable inflation rate.
The index improved across almost all sectors in May, with the banking sector improving by 24.9, the automotive sector by 18.5, the chemicals and pharmaceuticals sector by 14.9, the metal and steel machinery sector by 10.5, and the electronics sector by 10.5, particularly as the Bank’s interest rate cut at its last meeting had a positive impact, particularly on the banking sector. In contrast, the Eurozone index rose by 30.1 points to 11.6 points in positive territory, compared to -14 in April’s reading, while expectations had indicated a decline of around -3.5 points. The current situation assessment also improved by 8.5 points to -42.4.