In June, the SAFE Manager Sentiment Index declined from +0.26 to -0.08 points. The continued decrease of the index and the entering of now negative territory reflects a cooling of optimism among executives of companies listed in Germany. The decline is primarily driven by a more cautious tone in earnings conference calls, where the relevant sub-index dropped from 1.42 to 0.85 points. In contrast, the tone in financial reports remained largely stable, moving only slightly from -1.01 to -0.98 points. In contrast to financial reports, which mostly focus on firms' past results, managers use earnings conference calls to share their expectations about future business and economic conditions. Thus, their more cautious tone in the earnings calls indicates decreased optimism about the upcoming quarters.
Since its peak in March, driven by expectations of a newly formed and stable German government, managers’ statements now show a more reserved and defensive outlook amid tariff announcements, trade conflicts, and continued global uncertainty.
This picture is confirmed by SAFE’s new management uncertainty measure, which remains at record highs with 1.71 points. “Due to geopolitical tensions and unpredictable trade policy, companies are adopting a more cautious stance,” says SAFE Scientific Director Florian Heider. “What we observe is not just temporary concern, but broader, cross-sector hesitation.”
Mixed signals from companies’ communication
A closer look at earnings calls from March to May shows a mixed picture. Negative terms like "negative impact," "declined sales," and "challenging market" point to widespread concerns about business conditions. At the same time, positive expressions such as "strong growth," "positive impact," and "profitable growth" remain common, indicating that many firms still see solid performance and growth opportunities. As one manager argued: "After a strong start into the year and despite the current geopolitical development and the ongoing debate on US tariffs, we confirm our guidance for the fiscal year '25, [...]"
"Our data shows that even when firms report solid figures, they often highlight volatility and macroeconomic risks in the same breath," says Alexander Hillert, Professor of Data Science and Finance at SAFE.
Uncertainty continues to be a dominant theme. Executives frequently mentioned "market volatility," "difficult predict," and “a lot of uncertainty.” Compared to the firms' previous earnings calls, mentions of negative terms like "declined earnings," "dollar weakness," and "macroeconomic uncertainty" have all increased.
However, the sentiment is not uniformly negative. Increases in the usage of terms like "strong numbers" and "innovation launches" suggest that some companies successfully navigate the environment.
One manager from the agricultural sector explains in front of the analysts: "Despite weaker demand, we were able to maintain our pricing power, which demonstrates again the strength of our business model in the midst of a weaker agricultural cycle." This balances optimism and concern while the level of uncertainty continues to signal a more fragile outlook.
The SAFE Manager Sentiment Index
The SAFE Manager Sentiment Index measures the optimism or pessimism expressed by executives of listed companies in Germany on a monthly basis. 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.
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