German Investor Confidence Rises in Modest Sign of Pickup

(Bloomberg) -- Investor confidence in Germany’s economic outlook improved for a fourth straight month, hinting at a modest pickup in momentum in the coming months.

A gauge measuring prospects for the next half year rose to minus 13.4 in February, beating an estimate for a gain to minus 13.6. While the index recorded its longest streak of improvements since early 2015, the negative reading means pessimists still outnumber optimists among survey participants.

German Investor Confidence Rises in Modest Sign of Pickup

Key Insights

  • ZEW President Achim Wambach said he doesn’t expect a rapid recovery. “The economic situation in Germany has been weak, especially in the manufacturing sector. The figures for industrial production have once again seen a decrease, incoming orders are stagnant and foreign trade currently provides no fresh impulses.”
  • Some 19.6 percent of respondents said that the outlook for the German economy improved, compared with 33 percent who saw a deterioration
  • Investors were most pessimistic about the car industry, steel manufacturing and banking
What Our Economists Say...
“The most recent indicators in which we place most trust suggest downside risks to our forecasts. Should the January levels hold for the rest of the first quarter, the Ifo and PMI surveys are consistent with growth of between -0.1 percent and +0.1 percent -- we forecast an expansion of 0.3 percent.”

-- Jamie Murray and Maeva Cousin, Bloomberg Economics. Read the full GERMANY INSIGHT

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  • While German economic growth is likely to remain subdued at least through the first half of the year as deteriorating business expectations threaten to hamper company investment, there’s no reason for concern, according to the Bundesbank.
  • European Central Bank chief economist Peter Praet said policy makers could push back their plans to raise interest rates if momentum in the euro area deteriorates sharply. French central banker Francois Villeroy de Galhau recently described the slowdown as “significant.”

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