german zew aug econ sentiment preview
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OUTLOOK SET CONTINUE DOWNWARD TREND

- Economic Sentiment Seen Down To -26.0 (prev -24.5)

- Current Conditions Forecast Lower At -3.7 (prev -1.1)

- Release Due At 09.00 GMT on Tuesday, 13 August

 

Frankfurt, 12 August (LS NEWS) – Investors and financial market experts are expected to report another reduction in their confidence in the German economy a day ahead of the publication of the first estimate of the country’s second-quarter GDP.

 

Both components of the ZEW thinktank’s monthly survey are forecast to fall this month after the current conditions reading turned negative for the first time in nine years last month.

 

In July, the ZEW’s economic expectations for the Eurozone slipped to -20.3 from -20.2 in June.

Nomura said with bad news piling up for Europe’s largest economy, those surveyed by the ZEW will respond accordingly.

 

The Sentix headline index of German investor confidence produced the worst reading in a decade earlier this month, and the US-Sino trade war has worsened.

 

“Incoming data in Germany are likely to have caused additional concerns, as June’s industrial production slipped more than expected and July’s inflation missed expectations,” Nomura said.

 

“All of this has happened over the past two weeks, during the same period over which the ZEW survey was conducted. As a consequence, we think financial analysts’ expectations will weaken in August and we forecast the expectations component of the ZEW survey to drop to -28.”

 

Geopolitical Status Quo Undercuts Sentiment

 

Last month, ZEW President Achim Wambach blamed the declining confidence of respondents on soft factory orders and a number of still-salient factors: the ongoing Sino-US trade war, the uncertainty over Brexit, and Washington’s conflict with Iran.

 

Oxford Economics said the weaker Sentix results this month and the “adverse news flow” bode ill for the ZEW’s German and Eurozone indicators, “a bad omen for the all-important August PMIs that could be an important input into the ECB’s deliberations ahead of their next meeting in early September.”

 

---Eric Culp, European Editor

 

Twitter: @EricCulpLS

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