Rather early this time I would like to take my monthly dive into the nuts & bolts of the German economy:
According to Destatis, German GDP grew bei 0.3% in Q2/26. Deutsche Bank instantly raised the ceiling for the overall year from 0.5% to 1.0% (here, in-depth-analysis here). So everything is fine, right? Not so much, as this growth was probably mainly fueled by a doubling ot the fiscal deficit (here), the increasing debt endangering Germany’s Triple-A-Rating (here).
The German DAX price index (for an explanation, why I prefer this index, cf. here) started at 9,140 points on 1st July, rising to 9,423 points on 6th of August before crashing to 9,038 points on 23rd July and then zig-zagging it’s way back to 9,354 points on 31st July, thereby gaining 114 points in the course of the month.
German industrial orders – after gaining a considerable +5% (MoM, even 6.3% YoY) in March, then losing -3.8% (MoM, still 1.6% YoY) in April, gaining 1.9% (MoM, even 6.2% YoY) in May, gained another 3.1% (MoM, even 6.5% YoY) in June 2026. Germany’s industrial production, after a decline of -0.7% (MoM, even -2.8% YoY) in March, a minor gain of 0.4% (MoM, still -0.5% YoY) in April and another 0.9% (MoM, still flatlining YoY) in May, it gained a further 0.2% (MoM, but -0.1% YoY) in June 2026. Also, German exports, after gaining 0.5% (MoM, even 1.9% YoY) in March, increased by 0.9% (MoM, even +3.6% YoY) in April and, again, by 0.9% (MoM, even 6.1% YoY) in May and, again, by 0.9% (MoM, 6.0% YoY) in June 2026. For other German KPI’s, I refer you, first, to the usual (but now „refurbished“ (cf. here) „Destatis Deutschland-Dashboard“ (here) and the „Data Commons (Germany)“ (here), but also to the new IWH Forecasting Dashboard and the DATEV Mittelstandsindex.
The German Target 2 balance lost another 6bn in July 2026 and ended at Euro 1,037bn. The German inflation-rate continued to feel the spillover effects from the Gulf-War: starting from its peak of 10.4% in October 2022, the rate decreased to finally 1.6% in September 2024, re-increased to 2.6% in December 2024. After 2.7% in March, 2.9% in April, 2.6% in May, 2.3% in June, the rate increased to 2.8% in July 2026 (each YoY).
The German Labor market remains weak: Unemployment, after 6.4% in April, unemployment fell to 6.3% in May and to 6.1% in June, but rose to 6.4% in July 2026 (all MoM). „Overall, the weak trend of the past few months is continuing in the labor market,“ said Daniel Terzenbach, Executive Board Member for Regions at the Federal Employment Agency (BA). German CORPORATE insolvency procedures, after a „decrease“ by –0.7% in February, an increase by an incredible 15.8% in March, another gain of 7.1% in April, decreased by -2.0% in May 2026 (all YoY, cf. my most recent comment, here, in German).
The leading German sentiment indicators were positively in sync in July: The German (Industrial) Purchasing Managers’ Index (PMI) gained some 2.2 points to 52.2 points in July 2026. Also, the ZEW Indicator for business expectations gained another 15.8 points to +26.3 points in July 2026. Also, the ifo Business Climate Index gained another 1.1 points and increased to 86.6 points in July 2026. Also, the GfK-consumer index slightly increased by 0.3 points to -27.4 points in July 2026.
To sum up: GDP, DAX, the „hard“ KPI (orders, manufacturing, exports) are rising, insolvencies are falling and all sentiment indicators point north. Hence, everything is great in Germany, isn’t it? Well, the current GDP-growth is mainly fueled by eczessive debt, while overall Germany’s economy is seriously lacking efficiency (here), which leads to a 20-year-high in business-closures (here) and a total sell-out of the German Mittelstand (here). Hence, if you dare to read the fine print behind the glossy headlines, you find that the German economy carries a lot of structural flaws which are currently mostly covered by „Special Funds“ („Sondervermögen“) – hence debt. When the debt runs out without a structural transformation of the German economy, we will be stranded with a whole lot of debt and no functioning economy. Let’s hope that our government finally gets the drift…