Looking at the sentiment indicators right now, it’s hard to believe what you’re seeing. Despite adverse conditions - including very high fuel and natural gas prices as well as rising interest rates - the business climate continued to improve in September, and the Purchasing Managers’ Index is also showing increasing growth. Fortunately, the German economy is currently not only benefiting from the fiscal stimulus but is also able to participate in the global boom in investments in data centers and electrification. Strong wage growth is also helping to stabilize private consumption. Given the once again well-filled order books, we expect the economic upturn to gain even more momentum next year. However, this depends on an increase in energy flows from the Gulf region. Since sentiment indicators underestimated growth in the spring, we wouldn’t be surprised by the opposite outcome at this point: There may be a slight disappointment when the Federal Statistical Office announces the gross domestic product for the third quarter at the end of October.

Dr Philipp Scheuermeyer

Following his hawkish speech at the Jackson Hole economic symposium, Fed Chair Kevin Warsh must now deliver to shore up his credibility as an inflation fighter. The most straightforward path to doing so is a rate hike. Ironically, Trump’s public pressure for a rate cut forces Warsh’s hand even more, compelling him to secure the confidence of financial markets through an uncompromisingly credible stance. Since the Fed under his leadership has deliberately abandoned traditional forward guidance, market participants are increasingly navigating from data point to data point. In light of rising inflation, a continuing robust labour market and resilient private consumption provide the US central bank with the necessary leeway for interest rate increases. A clear signal at this juncture could ultimately afford Warsh new flexibility once price dynamics cool down again. Should such a signal fail to materialise despite persistently high inflation, it is likely to leave markets further rattled.

Dr Stephan Bales

A further interest rate rise of 25 basis points on Thursday is highly likely and would be in line with the comments made by members of the ECB Governing Council in the run-up to the meeting. With inflation at nearly 3 per cent and little sign of a noticeable slowdown in eurozone growth, there will be a broad majority within the Governing Council in favour of raising key interest rates. There will be significantly more disagreement on the question of what the future course of monetary policy should look like. Inflation data so far do not suggest that the energy price shock is ‘spilling over’ into broader price categories. An immediate tightening of monetary policy is therefore not necessary. Service inflation, the component of the basket of goods that is crucial for the ECB, remains stable, albeit at an elevated level. It is therefore to be expected that ECB President Lagarde will provide little indication on Thursday – beyond general statements on monetary policy – as to the direction in which monetary policy will move. The continuing high level of geopolitical uncertainty also suggests that the ECB will keep all options open. Against this backdrop, we anticipate a prolonged pause following the September move.

Dr Dirk Schumacher

The German economy weathered the energy price shock remarkably well in Q2. Furthermore, growth figures for the first quarter have been revised slightly upwards, so we can now expect a number of upward revisions to economic forecasts. One reason for the positive growth reported in the flash estimate was surprisingly strong exports. In the manufacturing sector, a number of indicators – such as new orders and turnover – are consequently pointing significantly upwards again. Private consumption also remained broadly stable, despite the loss of purchasing power, as reflected in retail turnover. Finally, it is encouraging that business surveys also improved significantly in July, led by the Purchasing Managers’ Index. Nevertheless, the crisis is not yet over, as the Strait of Hormuz remains blocked and a stable ceasefire is not yet in sight. Furthermore, the ongoing drought could still restrict industrial production somewhat this summer due to supply bottlenecks.

Dr Philipp Scheuermeyer

The May production data, once more, reflect the imbalances caused by the war in Iran, making the data difficult to interpret. The effect of bringing forward purchases due to fears of supply shortages is countered by caution stemming from concerns about the future. More importantly, however, it has to be said that the recovery has already begun behind the scenes. This is evident in the manufacturing sector’s order intake, which – even when excluding major contracts – is clearly trending upward. This will soon fuel production in this country over the longer term, especially once oil and gas can again pass freely through the Strait of Hormuz and reforms provide additional momentum.

Dr Sebastian Wanke

As the situation in the Middle East stabilises, the inflation shock is also subsiding. Fuel prices are falling again. Whether consumer price inflation will continue to decline in the coming months remains to be seen. This is not only due to the impending termination of the fel tax rebate. The situation in the Persian Gulf remains fragile and gas prices have not followed the rapid decline in oil prices. Furthermore, the current trend of very favourable food prices could soon come to an end. The high fertiliser prices of recent weeks and the looming severe El Niño are likely to have a delayed impact.

Stefanie Schoenwald

The preliminary results for the Composite PMI for June show a further slight deterioration in business sentiment in Germany, driven by the services sector. This continued downturn suggests that the war in Iran is just one factor weighing on business sentiment. It is also noteworthy in this context that sentiment among French businesses improved significantly in June. There is no question that the end of the Iran war and the decline in oil prices will have a positive impact on the German economy. However, today’s figures suggest that this alone will not be enough to trigger a renewed acceleration later in the year. Fiscal stimulus and further reform efforts are necessary for a lasting improvement in sentiment.”

Dr Dirk Schumacher

Following several very strong quarters, US economic growth is cooling off as expected, reaching an annualised rate of 1.4% in the fourth quarter. The government shutdown between October and mid-November throttled momentum through reduced government spending and delayed consumption effects. All in all, 2025 reflects a solid growth rate of 2.2%, which is remarkable given the high level of political uncertainty and dynamic policy shifts. A key driver was the high level of investment in Artificial Intelligence, which remained largely unfazed by economic policy turbulence throughout 2025. In parallel, private consumption continues to support growth despite dampened sentiment. A decisive factor for the future trajectory will be whether the clouded household confidence begins to weigh more heavily on spending behaviour.

Dr Stephan Bales

Today's slowdown in production follows three consecutive monthly increases. With an increase of 0.9 per cent compared to the third quarter, quarterly momentum remains strong. Together with the excellent order intake, which will only have an impact on production after a delay, the trend reversal in production in this country is likely to be completed soon. Overall, this is a solid foundation, perhaps even a springboard for growth in 2026.

Dr Sebastian Wanke