Investor confidence for Germany has risen in August on early signs of an economic recovery in Europe.
The ZEW indicator for economic sentiment in Germany, which measures expectations for the next six months, has increased 5.7 points to 42.0, the highest level since March and well above the historic average of 23.7, according to the ZEW Centre for European Economic Research. At the same time, investors’ assessment of the current economic situation in Germany has jumped 7.7 points to 18.3.
‘First signs of an end to the recession in important eurozone countries may have contributed to the indicator’s rise,’ ZEW writes in its analysis of the survey data. ‘This is also reflected by the strong increase of economic expectations for the eurozone. Furthermore, the economic optimism is supported by robust domestic demand in Germany.’
Early data for July shows manufacturing in several European nations rising along with imports from Asia, after June gains in industrial output, exports and other measures of economic activity in Germany and elsewhere. This is increasing optimism that the continent is emerging from its period of economic contraction.
Investor confidence in the eurozone as a whole has risen sharply to 44.0 – a gain of 11.0 points –in August. Investors’ assessment of the current economic situation in the region remains deeply in the negative, however, at minus 74.1 points, though it has edged up 0.6 points in August from July.
Germany is the only eurozone country measured in the index that scores a positive assessment of the current economic situation. The assessment for Italy has dropped 1.1 points to minus 89.6, giving it the worst rating among all European countries measured by the ZEW index.
In terms of economic expectations for the next six months, France registers the biggest gain among the eurozone countries included in the index, rising 17.4 points and placing the outlook firmly in positive territory, at 19.1. Italy comes next, gaining 13.1 points to 24.6, followed by the UK, which has risen by 7.4 points to 28.3.
The main ZEW indicator is based on a survey of 252 analysts taken between July 29 and August 12. The numbers represent the difference between the percentage of analysts with positive outlooks and those with negative outlooks.
