The SAFE Manager Sentiment Index fell from +0.61 to +0.26 in May. The main reason is the more cautious tone in earnings conference calls as many executives of listed companies in Germany were unable to provide meaningful guidance at this moment. Their April statements reflect growing uncertainty. Top on managers' minds was the difficulty quantifying the knock-on effects of tariffs, worries about drops in consumer sentiment, and future exchange rate dynamics.
In April 2025, Donald Trump announced broad import tariffs, coalition talks in Germany were stalling, and global tensions rose – all leading to a decline in the Index. Florian Heider, Scientific Director at the Leibniz Institute for Financial Research SAFE, comments: “When the rules of the game become unclear, companies take a step back. Our data show that uncertainty is now not just high – it’s changing in nature. What was once focused on specific sectors is now about the global economic order as the US no longer wants to fulfill its traditional role. This shift is reflected in our Index.”
Several firms refrained from offering any guidance for the year. One executive explained that it has rarely been so difficult to offer a serious outlook at the start of the year — especially given the uncertainty caused by global trade developments affecting both their company and their customers.
This climate of uncertainty is causing many firms to delay decisions. Referring to the industrial sector, one manager said: “(…) we see that customers just don't know whether things really come into effect and basically keep their current set up for the time being… So that's why wait and see is actually something that we see rather skeptical. It delays certain investment decisions, and we also see some weighing on consumer confidence.” Another executive from an industrial goods company noted: “With the tariff story changing daily or hourly, it's very difficult to get some planning stability for people to be making new investments.”
New measure of uncertainty
Uncertainty will remain a dominant issue in 2025. The team around Alexander Hillert, Professor of Data Science and Finance at SAFE, from now on measures uncertainty systematically in corporate communications, using the Loughran and McDonald Dictionary of Uncertainty Words. „Our results reveal that, in the April earnings calls, uncertainty has reached its highest level over the past year. Terms like "unclear," "volatile," and "risk" appear more frequently,” argues Hillert.
The SAFE analysis captures uncertainty based on narratives – how often corporate leaders express ambiguity, risk, or doubt. It complements traditional market-based measures like the volatility index VIX, which reflects market expectations of future stock price fluctuations, with a qualitative dimension. In other words, it enables pinning down what top managers are uncertain about.
The key concern are still tariffs, as several statements in earnings calls show: “The potential outcome of US import tariffs remains far too uncertain for us to quantify.” Even companies that feel shielded from direct tariff effects voiced concern about knock-on impacts: “We are very confident the tariffs will not hit us very hard. But what we don't know yet and what is incredibly hard to anticipate is obviously what that will do to our customer base and their supply chains, respectively.” Consumer goods firms worry about weak demand, driven by general uncertainty and tariffs, as well as a weaker dollar hurting exporters. Some carmakers are considering shifting investments or production to the US due to policy changes.
Over the past year, the analysis of uncertainty already shows increases and declines related to political decisions. The sharp increase in uncertainty in December 2024 coincides with the US presidential election and the end of Germany's coalition government. In contrast, the decline in March 2025 aligns with increased political stability in Germany and a new US trade policy not yet impacting the global economic order.
The SAFE Manager Sentiment Index
The SAFE Manager Sentiment Index measures the optimism or pessimism expressed by executives of listed companies in Germany monthly. Developed by Alexander Hillert and his team at the Leibniz Institute for Financial Research SAFE, the Index is based on automated text analysis that evaluates positive and negative statements in financial reports and analyst conferences. The Index is based on a three-month rolling window of data.
The future scheduled release dates for 2025 are:
- Wednesday, 11 June
- Wednesday, 9 July
- Tuesday, 12 August
- Tuesday, 9 September
- Wednesday, 8 October
- Tuesday, 11 November
- Tuesday, 9 December
