Germany’s economic sentiment hits highest level since early 2022
Germany’s economic sentiment hit a 3-year high in July, with the ZEW index rising to 52.7 amid hopes of a US-EU trade resolution and German stimulus. The eurozone’s outlook also improved, while markets stayed cautious after new US tariff threats.
Germany’s ZEW Current Conditions index rose to -59.5 in July 2025, its highest level since June 2023, up from -72 the previous month and outperforming expectations of -66.
Wambach pointed to hopes of a speedy resolution to the US-EU tariff standoff, alongside the German government’s proposed emergency investment programme, as key drivers of optimism.
The upbeat sentiment was particularly notable in expectations for mechanical engineering, metal production and the electrical engineering sector.
The positive sentiment extended to the broader eurozone. The ZEW sentiment index for the single-currency bloc rose modestly to 36.1 in July, up 0.8 points from June.
The assessment of current conditions in the eurozone also improved, though it remained in negative territory at minus 24.2, a 6.5-point gain from the previous month.
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Markets steady as trade tensions linger
Financial markets reacted with caution. The euro gained 0.2% against the US dollar to $1.1680, on track to snap a four-day losing streak.
Bund yields dropped 3 basis points to 2.69%, after hitting on Monday their highest levels since early April.
Still, investor nerves were apparent after US President Donald Trump announced a new 30% tariff on European Union imports from 1 August. The European Commission has pledged to intensify negotiations to avert a trade-war escalation.
Germany’s DAX index was unchanged at 24,200 points, consolidating after three consecutive sessions of losses. The broader Euro STOXX 50 rose 0.3%, supported by strength in industrial and automotive names.
Among top gainers, ASML Holding advanced 2.4%, followed by BASF (1.92%), Mercedes-Benz (1.74%), Volkswagen (1.45%) and BMW (1.44%). On the downside, L’Oréal fell 1.35%, Orange slipped 1.23% and Telefónica declined 0.91%.
