Germany’s ZEW Indicator of Economic Sentiment rose +13.8 pts to +59.6 in January 2026, reflecting a sharp improvement in expectations alongside a less negative assessment of current conditions.

• The ZEW current situation indicator for Germany improved to -72.7 in January (from -81.0), a +8.3 pt MoM move, indicating the present-day assessment is still weak but less pessimistic than last month.

• Euro area expectations also strengthened, with the eurozone expectations balance rising to +40.8 (+7.1 pts MoM), while the euro area current situation balance improved to -18.1 (+10.4 pts MoM).

• Survey breakdown for Germany’s current situation showed 75.0% rated conditions as “bad” (vs 22.7% “normal” and 2.3% “good”), leaving the balance at -72.7 despite the monthly improvement.

• Germany expectations were heavily skewed positive, with 63.7% expecting improvement (32.2% no change; 4.1% worse), producing the +59.6 expectations balance and underscoring the optimism shift.

• Export-oriented industries recorded notable sentiment gains despite new US tariff announcements, with balances rising +18.2 pts in steel/metal and +22.7 pts in mechanical engineering, suggesting improved outlooks in cyclically sensitive segments.

• Sector sentiment improved across autos (+16.5 pts to -5.5), chemicals/pharma (+12.4 pts), and electrical engineering (+14.0 pts), which ZEW linked to stronger-than-expected industrial production in November 2025 and a surprisingly strong rise in orders.

• ZEW cited the Mercosur agreement as supportive for export-intensive industries, while emphasizing unpredictable US trade policy as a continuing burden on Germany’s export economy.