The monthly SAFE Manager Sentiment Index evaluates earnings calls and financial reports by listed companies in Germany. On a quarterly basis, the key issues discussed by managers are summarized on the SAFE Finance Blog. This issue of the blog is based on the 134 calls that took place in the fourth quarter of 2025. During the last four months, the Sentiment Index turned from negative values of -0.4 in October and -0.31 in November to a positive value of 0.23 in December 2025 and continued to rise to 0.31 in January 2026. The increase may reflect an adjustment to the uncertain macroeconomic environment. Beyond global developments, domestic factors also boosted manager sentiment toward the year-end: successful corporate restructuring programs and optimism about the implementation of the German fiscal stimulus package.
The basic materials sector is “under pressure”, while the real estate sector remains “rock solid”
The export-oriented basic materials sector (based on the Thomson Reuters Business Classification) showed the most negative sentiment among all sectors since March 2025, likely reflecting persistent headwinds from weak demand and intensifying competitive pressure from China. Manager sentiment in the sector has picked up since October, but the pace of improvement slowed recently. As one manager put it: “The Chemical industry is under pressure worldwide, but especially in Europe. The economic situation is tense and demand is weak. At the same time, the market environment is challenging and competitive pressure is high, especially from China. In addition, the stronger euro creates headwinds.” Another manager reinforced this concern, noting: “We have pretty tough competition from China as well.”
The real estate sector stands out at the upper end of the sentiment distribution, where managers closed the year with confidence and extensive discussion on operational performance. One executive summarized: “Our market environment and operating business remains rock solid, and we are well on track towards achieving our ambitious targets […]”. This optimism is underpinned by stabilizing construction cost inflation and continued rent growth, reflecting delayed inflation pass-through. As another CEO highlighted, “rental growth remains at elevated levels. Interest costs have stabilized over the last month. Rents are also still outpacing general inflation,” supporting stronger return expectations across existing assets.
Fiscal stimulus adds optimism but timing uncertainty persists
A recurring topic across calls was the German fiscal stimulus package. Especially the industrials and financial sectors welcomed it as a supportive tailwind for demand, lending growth, and the broader German macroeconomic environment. Several managers expected it to become an incremental catalyst once spending ramps up: “Looking into 2026, we expect demand in Germany to pick up as the extra spending […] should start stimulating the economy,” and “We expect lending[…] to benefit from the fiscal stimulus in Germany and to accelerate over the course of 2026.” At the same time, some managers remain cautious, warning that implementation will likely be delayed given long planning cycles and regulatory complexity. As one executive noted, “investments into infrastructure [are] quite a long-term item,” while another emphasized that “we will not see really any impact even next year […] probably more in 2027.” Others therefore frame the package as helpful but not transformational: “It will help in some places […] but […] it’s not the main game changer.”
Persistent macro uncertainty and foreign exchange headwinds
Reflecting on the year, managers repeatedly characterized the environment as challenging and volatile, with tariffs, foreign exchange (FX), especially a weak US dollar, and China-driven competition dominating the macro narrative. As one put it: “The market environment remains challenging”. FX developments were already a concern for some managers in the third quarter of 2025, but the assessment of the strong euro and weak US dollar became more negative in the final quarter of 2025. “Currency effects dampened sales in all divisions.” described one manager from the chemicals industry. Another CEO from the consumer cyclicals industry noted: “Reported sales were down 15.3% […] driven by currency headwinds, especially from the US dollar and the Argentine peso.”
Focusing on what they can control
As CEOs grew more accustomed to the volatile and uncertain business environment, they increasingly emphasized execution, focusing on what they can control. Many firms reported ongoing transformation programs, with an emphasis on financial fundamentals, cost management, liquidity, and profitability. According to one manager from the industrials sector, 2025 was about strategic change and active decision-making: “A year of decisions is behind us […] a year in which we bravely embarked on new paths and set the course for the future.” Executives highlighted adaptability and continued progress: “we are fully focused on effectively managing what we are controlling, adjusting to news quickly and advancing in our transformation.”
What will 2026 bring?
While cautiously optimistic, managers remained reluctant to give firm guidance for 2026. “You hear me silent because we are not at the time of the year to make any prognosis. But I remain optimistic, yes.”, commented a manager from the consumer cyclicals industry. A manager from the real estate sector echoed this sentiment, staying vague but upbeat: “Overall, we think 26 will be better. Massively better than 25.” Another CEO emphasized confidence in continued momentum: “We are confident we can carry the momentum from our core business into 2026, and we expect double-digit organic revenue growth again.”
Yet, managers broadly expected macro headwinds to persist, from FX pressure to tariffs and weak demand. As one executive noted, “We expect significant currency headwinds to continue in 2026,” while another added that companies must be ready for “a scenario where tariffs are to stay as part of the operating business.”
At the same time, it remains to be seen whether this predominantly positive manager sentiment will hold, as early 2026 has already brought new geopolitical volatility. The renewed tensions around Greenland and the related threat of US tariffs on eight European countries briefly unsettled financial markets before an agreement was reached.
Alexander Hillert is Co-Director of the SAFE Department “Financial Intermediation” and Professor for Finance and Data Science.
Denise Rößler is Financial Economist at the SAFE Policy Center.
Blog entries represent the authors’ personal opinion and do not necessarily reflect the views of the Leibniz Institute for Financial Research SAFE or its staff.
