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German Investors Turn Optimistic for First Time Since April

German Investors Turn Optimistic for First Time Since April

(Bloomberg) --

Investors no longer see Germany’s growth outlook deteriorating, marking a turnaround in sentiment after months of pessimism over Europe’s largest economy.

ZEW’s index of expectations for the next six months increased to 10.7 in December, the highest since early 2018. The first positive reading since April suggests more respondents predict prospects will improve than worsen. Economists had forecast a much smaller gain.

German Investors Turn Optimistic for First Time Since April

While the report comes amid broader signals that growth momentum will increase, the economy has yet to demonstrate a pickup from months of manufacturing woes. A slump in factory orders and industrial production unexpectedly deepened in October, data last week showed, highlighting the damage U.S.-China trade tensions and Brexit uncertainty have done to what once was Europe’s powerhouse.

The jump in expectations “rests on the hope that German exports and private consumption will develop better than previously thought,” ZEW President Achim Wambach said in a statement. “The economy is still quite fragile.”

European Central Bank decision makers are due to meet this week for the first policy update under its new president, Christine Lagarde. Officials eased monetary policy in September to bolster the economy, and urged governments at the same time to step up fiscal spending.

Lagarde has echoed that sentiment since taking office. Yet German lawmakers have resisted the call, arguing that it would take a more severe crisis to unleash stimulus beyond initiatives already under way.

--With assistance from Kristian Siedenburg and Harumi Ichikura.

To contact the reporter on this story: Carolynn Look in Frankfurt at clook4@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jana Randow

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