Eurozone Investor Morale Stronger than Anticipated

The ZEW Indicator of Economic Sentiment for the Euro Area rose further to 31.4 in August 2026, the highest in six months and beating market expectations of 25.4. This marked the third consecutive month of improvement in sentiment across the bloc. In August, 57% of analysts expected no change in economic activity, while 37.2% anticipated an improvement and 5.8% expected deterioration. The assessment of the current situation also improved, with the index surging 16.2 points to -21.5, while inflation expectations declined 8 points to 2.4.

The ZEW Indicator of Economic Sentiment for the Euro Area rose by 13.9 points to 23.4 in July 2026, the highest in five months and beating market expectations of 11.2. The uptick suggests sentiment is improving, as markets continue to price in hopes of a resolution to the Iran conflict. In July, 64% of analysts expected no change in economic activity, while 29.7% anticipated an improvement and 6.3% expected deterioration. The assessment of the current situation also improved, with the index rising 5.7 points to -37.7, while inflation expectations dropped 35.4 points to 10.4.

The ZEW Indicator of Economic Sentiment for the Euro Area climbed by 18.6 points from the prior month to 9.5 in June 2026, way better than market forecasts of -7.2. The improvement was underpinned by hopes of a resolution to the Middle East conflict, which should alleviate pressure on energy prices and inflation. In June, 57.7% of analysts expected no change in economic activity, while 25.9% anticipated improvement and 16.4% expected deterioration. The index measuring inflation expectations declined by 19.5 points to 45.8. Meanwhile, the assessment of the current situation was less favorable, with the index falling by 2 points to -43.4.