June Data Shows Cooling Inflation, Improving Business Sentiment, and Falling Unemployment

A cluster of end-of-month economic releases pointed to a modestly improving picture for Germany's stagnant economy. Destatis' preliminary estimate put June 2026 CPI inflation at +2.3% year-on-year, down from +2.6% in May and below the +2.6% consensus forecast, aided by a temporary fuel-tax reduction running May 1–June 30. The ifo Institute's Business Climate Index, published June 24, rose to 85.6 points from 85.0 in May — the fourth consecutive monthly improvement, though still well below its long-run average, with the ifo's follow-up regional release on June 30 noting business sentiment in eastern Germany continuing to strengthen. Separately, the Federal Employment Agency reported registered unemployment fell by 15,000 in June to 2.936 million, nudging the unemployment rate down 0.1 percentage points to 6.2%. Economists cautioned the improvements remain fragile, with services inflation still sticky at 3.1% and industrial output continuing a multi-year decline, but the data gave the Merz coalition some rare good news ahead of its reform package unveiling.