Investor Hopes for German Economy Rebound After Vaccine Progress

(Bloomberg) -- Investor confidence in the outlook for Germany improved, on hopes that the roll-out of Covid-19 vaccines will boost the recovery in Europe’s largest economy.

ZEW’s gauge of expectations for the next six months rose to 55.0 in December from 39 a month earlier. That’s still well below levels recorded in September, before the region was hit by a second wave of infections.

Germany shut restaurants, gyms and cinemas in November but kept shops open, trying a softer approach than some other European countries to rein in the disease. Yet with contagion rates remaining elevated, it’s now considering tightening measures.

So far, the nation’s relatively large manufacturing sector has helped the country weather the economic impact of the pandemic. Industrial output increased for a sixth month in October, according to a reading on Monday, with orders driven by both domestic and export demand.

“The announcement of imminent vaccine approvals makes financial market experts more confident about the future,” ZEW President Achim Wambach said in a statement.

Uncertainty around the outlook is still high though, as it’s unclear how quickly those vaccines will be made widely available. There may also be lasting damage from the crisis if job cuts increase and more companies go out of business.

Euro-area employment was down 2.3% in the third quarter from the previous year, despite a strong rebound in economic activity.

Output in the 19-nation region jumped a revised 12.5% in the July-September period from the previous three months, according to a Eurostat report, with private consumption and exports each contributing more than 7 percentage points.

The economy is likely to shrink again in the fourth quarter because of the new coronavirus curbs. The European Central Bank is poised to boost its emergency monetary stimulus this week to keep ensure companies and households get the support they need.

©2020 Bloomberg L.P.