Germany’s ZEW Expectations Index Falls 6.6 Points to 28.1 in October
Key Facts
Germany’s ZEW Economic Sentiment Index fell 6.6 points to 28.1 in October, the institute said, signaling waning optimism about the economic outlook. The decline came as the assessment of current economic conditions improved, painting a mixed picture of the German economy’s trajectory. The ZEW president said private consumption and investment remained weak because of higher energy prices. He added that energy costs were squeezing real incomes and raising production costs, while also keeping inflation elevated for longer. These factors place the weak expectations in the context of pressures facing households and businesses.
The assessment of current economic conditions rose 11.2 points to -35.9 in October, according to ZEW data. Despite the monthly improvement, the index remained in negative territory, while the expectations index declined. The divergence between the two indexes reflects an improved assessment of current conditions alongside a weaker outlook for the period ahead. The institute’s president said higher energy prices were weakening consumption and investment and adding to production costs. He also noted that these prices were keeping inflation elevated for longer.
The decline in expectations extended to the euro zone, where the ZEW index fell 7.3 points to 18.5 in October. The reading shows a monthly decline alongside the fall in the German index, although both indexes remained in positive territory. In Germany, the drop followed a reading of 53.8 for the composite purchasing managers’ index in September, up from 51.8 in August and its strongest since October of the previous year, according to Reuters via MarketScreener. September’s reading had pointed to expanding activity, while October’s decline in ZEW lowered the institute’s economic expectations for Germany.
In details of Germany’s September activity indexes, the services purchasing managers’ index rose to 52.9 from 49.7 in August, reaching a 7-month high and ending a 5-month contraction streak. The manufacturing index, meanwhile, fell to 53.8 from 54.3, but remained in expansion territory, according to Reuters via MarketScreener. An S&P Global official said September data showed the strongest rise in business activity in about a year, with services returning to growth alongside manufacturing. These readings provide context for the divergence between activity indexes, which reflected expansion in September, and Germany’s declining economic expectations in October.
Markets are awaiting the German Ifo Institute’s business climate index, due on 26 October 2026 at 10:30 Central European Time. The release follows a decline in the ZEW expectations index and an improvement in the assessment of current conditions, adding a fresh reading on Germany’s business climate. These dates are near-term milestones for tracking companies’ assessment of economic conditions and the European Central Bank’s deliberations.