German manufacturing posts its strongest growth in four years
Germany’s manufacturing PMI rose from 50.3 in June to 52.2 in July, matching its strongest expansion since May 2022. Production accelerated sharply, export sales improved, and new orders increased for a second consecutive month.
This is encouraging for engineers, industrial suppliers, logistics specialists and production workers. However, confidence remains restrained because energy prices, geopolitical tensions and Germany’s longer-term automotive restructuring still create uncertainty.
Employment and unemployment still point to a weak job market
Seasonally adjusted unemployment rose by 6,000 in July to 2.99 million, while the unemployment rate increased from 6.3% to 6.4%. Registered vacancies nevertheless rose by around 25,000 year-on-year to approximately 653,000.
Employment data also remain soft: Germany recorded another seasonally adjusted decline in the number of people employed in June.
🙌 Latest Videos:
- What EVERY EMPLOYEE in Germany must Know!
- Best Free Credit Cards in Germany
- I answer your Questions – Money Check-in Episode 2
Inflation remains elevated
Germany’s preliminary inflation rate rose to 2.8% in July, compared with 2.3% in June. Energy prices were estimated to be 8.3% higher than a year earlier, making energy the primary driver of the increase.
The more positive development is that Brent crude has fallen to around $78 per barrel, well below its June peak above $100, amid signs of diplomatic progress in the US-Iran conflict.
Sustained lower oil prices would reduce pressure on petrol, heating, transport, airfares and inflation. It could also lower the likelihood of additional interest-rate increases.
That said I don’t think the positive effect on your household bills will be immediate.
What this means for savers and borrowers
The current combination of 2.8% German inflation and falling oil prices gives mixed signals.
For savers, competitive Tagesgeld and Festgeld offers may remain available, but banks could lower rates if expectations shift toward easier ECB policy.
For borrowers, mortgage affordability should still be calculated using current financing conditions rather than assuming rapid interest-rate cuts. Lower oil prices help, but inflation remains above the ECB’s target.
Renters face little near-term relief
New-lease rents in Germany increased 3.5% year-on-year in the first quarter of 2026, while residential property prices were broadly flat over the quarter.
Property analysts expect urban rents to rise by around 3% to 4.5% over the coming year, with apartment vacancy rates below 1% in some major metropolitan areas.
For people relocating for work, the housing shortage remains a major practical constraint.
Also Please Please Please! do not transfer deposits or reservation fees before verifying the landlord, the property and the rental agreement.
Market Review
| Market | Daily change | Quick interpretation |
|---|---|---|
| MSCI World | +1.62% | Global equities rallied broadly as lower oil prices improved risk appetite. |
| S&P 500 | +1.78% | US large caps advanced strongly, supported by technology and AI-related spending. |
| Nasdaq-100 | +3.33% | Technology led the market with a powerful semiconductor-driven rally. |
| Germany | +1.05% | German equities gained as manufacturing data strengthened. |
| Euro Stoxx 50 | +1.23% | Eurozone large caps joined the global risk-on move. |
| Emerging markets | +2.60% | Emerging markets outperformed as investors returned to higher-risk assets. |
Market mood
Strongly risk-on, led by technology. Semiconductor shares drove Asian and US markets higher, while falling oil prices eased inflation and interest-rate concerns. The caution is that several AI-linked companies are still facing scrutiny over extremely high capital expenditure, so volatility is likely to remain elevated.
Bottom Line
The strongest positive development is Germany’s manufacturing rebound. It offers hope that the industrial slowdown is stabilising, although the jobs market remains weak and automotive restructuring continues.
For household finances, falling oil prices are the most helpful near-term development. Renters still face tight supply, borrowers should remain conservative, and travellers should check train connections through Thursday, 6 August.