german zew july econ sentiment
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OUTLOOK WORSENS FOR BIGGEST EUROPEAN ECONOMY

- Economic Sentiment Falls Again

- Current Conditions Lowest Since June ‘10

 

Frankfurt, 16 July (LS NEWS) – Investors and financial market experts expressed reduced confidence in Germany’s economic future and rated the current environment as the worst in nine years, according to this month’s ZEW survey.

 

The German thinktank said its forward-looking economic sentiment index for Germany fell to -24.5, which was below the consensus of -22.3. In June the index plunged to -21.1, an order of magnitude below the May reading.

 

The current situation index turned negative for the first time since June 2010 when it dropped to -1.1 in July, well short of the 5.0 consensus and the 7.8 mark in June.

 

The ZEW’s economic expectations for the Eurozone slipped to -20.3 compared to -20.2 in June and -1.6 in May.

 

“In particular the continued negative trend in incoming orders in the German industry is likely to have reinforced the financial market experts’ pessimistic sentiment,” said ZEW President Achim Wambach. He also blamed the sour mood on the ongoing Sino-US trade war, the uncertainty over Brexit, and Washington’s conflict with Iran.

 

May’s plummeting German factory orders and a decline in retail sales announced earlier this month created “a week to forget for the German economy”, ING Chief German Economist Carsten Brzeski said. May industrial production was also lower on the year, and even though output increased on the month it failed to reach the consensus.

 

Earlier this month, the Sentix economic index for Germany, a survey of investors that often serves as a bellwether for the ZEW data, fell to its lowest level since late 2009.

 

More Bad News Possible

 

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “Investors remain depressed, despite a solid performance of equities in recent months.

 

“For now, though, this data tells a story of downside risks to growth and also the economic surveys.” 

 

In other words, the poor performance of the ZEW’s headline measure indicates the possibility of weaker German momentum and a further decline in this month’s Ifo business sentiment indicator due next week.

Source: Pantheon Macroeconomics
Source: Pantheon Macroeconomics

 

--- Eric Culp

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