Germany’s ZEW Indicator of Economic Sentiment climbed 20.7 points to 10.5 in June 2026, marking its first positive reading since the Middle East conflict unsettled confidence in March and clearly outperforming market expectations of -6.0. The improvement reflects investor hopes that the conflict involving Iran will soon be resolved, easing pressure on energy prices and inflation. Lower energy costs would support energy‑intensive industries and households alike, providing a lift to domestic demand.
The sector data underline this renewed optimism. The automotive industry’s balance jumped by 21.9 points after months of decline, while the chemical/pharmaceutical and mechanical engineering sectors rose by 16 and 9.2 points, respectively. Expectations for private consumption also improved, gaining 11.7 points. Nonetheless, all of these sectors still remain in negative territory, indicating that sentiment, though better, is far from robust.
By contrast, the construction sector deteriorated further. Its balance fell by 15.2 points to -12, a decline likely linked to the European Central Bank’s interest rate hike on June 11. At the same time, the assessment of the current economic situation worsened slightly to -81, below the consensus forecast of -78.
