FRANKFURT – For the first time in a year, German financial market experts said they were less upbeat about the prospects of Europe’s largest economy as multiple sources of uncertainty rattled analysts.
The economic thinktank said Tuesday that its July expectations indicator for the next six months slid to 41.8 points versus the 47.5 reading in June and the market prediction of 41.0.
The current conditions reading improved to -68.9 points from -73.8 to beat the market forecast of -74.8)
The expectations measure for the Eurozone fell to 41.8 points from last month’s mark of 51.3, its highest since July 2021.
There was plenty of blame to go around for flagging optimism about the months ahead, according to ZEW President Achim Wambach. “The fact that German exports decreased more than expected in May, the political uncertainty in France and the lack of clarity regarding the future monetary policy by the ECB have contributed to this development.
“The economic outlook is worsening. For the first time in a year, economic expectations for Germany are falling.”
But at least one analyst is already seeing light at the end of this tunnel. Michael Herzum, head of economics and macro strategy at Union Investment, wrote: “Now that the worst fears in France have not come true, the mood is likely to improve again. In July, financial experts assessed the current situation somewhat better. In principle, there are good reasons for optimism: real incomes are developing well, and loans are becoming more affordable again. Both speak for an economic upswing.”
Indicators point down
The decline in the ZEW outlook for Germany and the euro area comes after the European Central Bank lowered its key interest rates 25 basis points early last month, and Switzerland followed suit two weeks later by cutting another 25bp from its main interest rate.
But prospects of falling borrowing costs have done little to boost optimism in Germany in recent days, especially with the ECB likely to slow the pace of cuts due to stubborn inflation. German business leaders surprised investor last month by expressing more concern about their lot. Purchasing managers indices also declined in June, with the composite reading just in growth territory above the 50-point line.
Weakness in the Sentix survey of investors this month had already signalled the possibility of worsening ZEW results. Sentix last week reported that after three months of improvements, German readings for the current situation, expectations, and the overall index in July all dropped sharply, and after eight consecutive increases, its headline reading for the Eurozone showed a significant decline.
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session_info.user_agent = data.user_agent;
session_info.browser_version = data.browser_version;
session_info.cookies_enabled = data.cookies_enabled;
session_info.platform = data.platform;
session_info.player_version = data.player_version;
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session_info.connection_protocol = data.protocol;
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session_info.session_email = data.session_email;
session_info.remote_ip = data.remote_ip;
session_info.php_session_id = data.php_session_id;
session_info.application_name = data.application_name;
session_info.http_referrer = data.http_referrer;
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function start_log() {
var session_start_date = new Date();
session_start_time = session_start_date.getTime();
var months = ['Jan','Feb','Mar','Apr','May','Jun','Jul','Aug','Sep','Oct','Nov','Dec'];
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data_array.username = session_info.session_email;
data_array.php_session_id = session_info.php_session_id;
data_array.webrtc_protocol = '';
data_array.session_start_time = (session_start_time/1000).toFixed(0);
data_array.stream_name = session_info.stream;
data_array.session_start_date = session_start_date_string;
var msg_string = JSON.stringify(data_array);
if (socket.readyState == 1) { socket.send(msg_string); }
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function update_session_info(data) {
var data_array = {};
var msg_string = '';
var current_date = new Date();
var current_time = current_date.getTime();
session_info.protocol = data.protocol;
session_info.curr_delay = (data.effective_latency / 1000).toFixed(2);
session_info.session_length = current_time - session_start_time;
session_info.ping_time = data.ping_time;
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session_info.packet_loss = data.packet_loss;
session_info.effective_latency = data.effective_latency;
session_info.mean_opinion_score = data.mean_opinion_score;
session_info.restarts = data.restarts;
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data_array = {};
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data_array.type = 'webrtc_log_data';
data_array.session_id = session_info.session_id;
data_array.php_session_id = session_info.php_session_id;
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data_array.restarts = session_info.restarts;
data_array.threshold = 0;
data_array.curr_delay = session_info.curr_delay;
data_array.session_length = session_info.session_length;
data_array.date = current_time;
data_array.webrtc_protocol = session_info.protocol;
data_array.ping_time = session_info.ping_time;
data_array.jitter = session_info.jitter;
data_array.packet_loss = session_info.packet_loss;
data_array.effective_latency = session_info.effective_latency;
data_array.mean_opinion_score = session_info.mean_opinion_score;
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- View of present ticks higher
- Expectations reading drops for first time in a year
- Trade, France, ECB policy blamed for decline
By Eric Culp, European Editor
LiveSquawk News
@EricCulpLS
16 July 2024 | 10:00 GMT
FRANKFURT – For the first time in a year, German financial market experts said they were less upbeat about the prospects of Europe’s largest economy as multiple sources of uncertainty rattled analysts.
The economic thinktank said Tuesday that its July expectations indicator for the next six months slid to 41.8 points versus the 47.5 reading in June and the market prediction of 41.0.
The current conditions reading improved to -68.9 points from -73.8 to beat the market forecast of -74.8)
The expectations measure for the Eurozone fell to 41.8 points from last month’s mark of 51.3, its highest since July 2021.
There was plenty of blame to go around for flagging optimism about the months ahead, according to ZEW President Achim Wambach. “The fact that German exports decreased more than expected in May, the political uncertainty in France and the lack of clarity regarding the future monetary policy by the ECB have contributed to this development.
“The economic outlook is worsening. For the first time in a year, economic expectations for Germany are falling.”
But at least one analyst is already seeing light at the end of this tunnel. Michael Herzum, head of economics and macro strategy at Union Investment, wrote: “Now that the worst fears in France have not come true, the mood is likely to improve again. In July, financial experts assessed the current situation somewhat better. In principle, there are good reasons for optimism: real incomes are developing well, and loans are becoming more affordable again. Both speak for an economic upswing.”
Indicators point down
The decline in the ZEW outlook for Germany and the euro area comes after the European Central Bank lowered its key interest rates 25 basis points early last month, and Switzerland followed suit two weeks later by cutting another 25bp from its main interest rate.
But prospects of falling borrowing costs have done little to boost optimism in Germany in recent days, especially with the ECB likely to slow the pace of cuts due to stubborn inflation. German business leaders surprised investor last month by expressing more concern about their lot. Purchasing managers indices also declined in June, with the composite reading just in growth territory above the 50-point line.
Weakness in the Sentix survey of investors this month had already signalled the possibility of worsening ZEW results. Sentix last week reported that after three months of improvements, German readings for the current situation, expectations, and the overall index in July all dropped sharply, and after eight consecutive increases, its headline reading for the Eurozone showed a significant decline.
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