Portfolio

German investor sentiment improves much more than expected - ZEW

By Michele Maatouk

Date: Tuesday 10 Dec 2019

German investor sentiment improves much more than expected - ZEW

(Sharecast News) - German investor sentiment improved much more than expected in December, according to the latest survey from the ZEW Center for European Economics Research in Mannheim.
The headline ZEW economic expectations index improved to 10.7 from -2.1 in November, beating expectations for a rise to 0.0 and marking the best level since February 2018.

Meanwhile, the current situation index improved to -19.9 in December from -24.7 the month before, beating expectations for a reading of -22.3.

ZEW President Achim Wambach said: "At first glance, the renewed substantial increase of the ZEW Indicator of Economic Sentiment may seem surprising. It rests on the hope that German exports and private consumption will develop better than previously thought. This hope results from a higher than expected German foreign trade surplus in October, alongside relatively robust economic growth in the EU in the third quarter and a stable German labour market.

"The rather unfavourable figures for industrial production and incoming orders for October, however, show that the economy is still quite fragile."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said the survey was "solid".

"The key story here is that the expectations index is now positive and rising, even as the current situation index remains depressed. Usually, this is a bullish signal in this survey. The details indicate that investors' short-term rate expectations are now rising slightly, though the outlook for long-term rates slipped. More crucially, expectations for equities soared, almost uniformly, across the board.

"Investor sentiment data are not always a reliable guide to the economic surveys, but the recent rebound in the ZEW and Sentix suggests that the recent tepid recovery in the manufacturing PMI will continue this month."

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