Investor Confidence in German Economy Climbs as Trade Fears Ease

(Bloomberg) -- Trade-war fears are diminishing among German investors, with a confidence index rising for a second consecutive month.

Expectations for Europe’s powerhouse improved more than economists predicted in September -- a gain the ZEW Center for European Economic Research pinned partly on a trade deal between the U.S. and Mexico that highlighted an alternative to escalating tensions. A gauge for the outlook in the 19-nation euro-area also improved.

Investor Confidence in German Economy Climbs as Trade Fears Ease

While global trade fears have weighed on some indicators tracking the health of the euro-area economy, the jump in the ZEW indicators suggests pessimism may have reached a low for now. The U.S. administration has reached a preliminary trade deal with Mexico and said it would seek fast-track approval from Congress for negotiating and agreement with the European Union.

Investor expectations for Germany-10.6-13.0-13.7
Investor expectations for euro area-7.2     n/a-11.1
Current assessment for Germany76.07272.6
Current assessment for euro area31.7     n/a30.0

“The considerable fears displayed by the survey participants regarding the economic development have diminished somewhat,” ZEW President Achim Wambach said in a statement.

European Central Bank Governing Council member Olli Rehn has said the global trade spat has so far had a “rather limited” impact on the euro-area economy, even though that could change if sentiment declines and damps prospects. The Ifo Institute’s gauge of confidence in the German outlook rose for the first time in nine months in August and the Bundesbank has said the economy remains on a “sound growth path.”

Investor Confidence in German Economy Climbs as Trade Fears Ease

There was also continued good news from the euro-area labor market on Tuesday, with employment rising for a 20th straight quarter. The 0.4 percent increase in the three months through June lifted employment to a record 158 million.

The ECB is due to meet this week, with a focus likely to be on new growth and inflation projections for the region and President Mario Draghi’s assessment of geopolitical risks.

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