German Investor Sentiment Edges Up as Outlook Remains Gloomy

(Bloomberg) -- German investor confidence edged up this month though there’s little optimism about a strong pickup from the current slowdown.

ZEW’s expectations measure for Germany rose to minus 24.1 in November from minus 24.7 in October. That compares with estimates in a Bloomberg survey for a decline to minus 26. A gauge for the euro-area economy fell.

Key Insights

• ZEW President Achim Wambach said survey participants “don’t expect to see a speedy recovery of the currently weak development of the economy”
• Euro-area sentiment gauge declined to -22 from -19.4
• Assessment of current situation in Germany fell 11.9 points to 58.2
• ECB Chief Economist Peter Praet said Tuesday that the euro-area economy has cooled recently, but blamed it on slower global activity and said domestic demand remains robust

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• Germany’s DAX Index is down about 14 percent since May and has dropped for each of the past three months, but is little changed so far in November
• The country’s first reading of third-quarter GDP is due on Wednesday, with economists in a Bloomberg survey predicting a decline of 0.1 percent. That would be the first contraction since 2014.
• Germany accounts for almost one-third of the euro-zone economy, so its performance has wider implications. Growth in the 19-nation currency bloc slowed to just 0.2 percent in the third quarter, the weakest in four years.
• Auto production has been hit by the shift to new emissions-test procedures which have hurt European sales. While that restriction should pass, car companies are also feeling the pain of trade tensions and China’s slowdown.
• A euro-area slowdown could prove problematic for the ECB’s plans to halt its bond-buying program in December. Officials including President Mario Draghi have insisted the outlook for euro-area growth is still favorable but have noted the rising external risks

--With assistance from Catherine Bosley.

To contact the reporters on this story: Piotr Skolimowski in Frankfurt at pskolimowski@bloomberg.net;Xiaoqing Pi in Frankfurt at xpi1@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Fergal O'Brien

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