​German Investor Sentiment Remains Subdued in September

Jack Duffy | FlashRatings | Tuesday, September 13, 2016 8:09 PM EDT
Analyst and investor confidence in Germany was weaker than expected in September following recent data showing growth in Europe’s largest economy had cooled.

The ZEW Center for Economic Research in Mannheim said Tuesday its economic expectations index, designed to predict economic developments six months ahead, was unchanged at 0.5 in September, well below the 2.5 level that analysts had forecast.

The somber September mood follows recent data showing that German industrial production and exports both plunged in July, the first full month following Britain’s vote to leave the European Union.

“The current ambiguity of economic impulses from Germany and abroad means that forecasts for the next few months are difficult,” ZEW President Achim Wambach said in a statement.  “German exports, particularly to non-EU countries, as well as industrial production figures, have disappointed. By contrast, the economic environment in the European Union is improving.”

Analysts said the low level of the ZEW expectations index suggests that investors are generally not expecting the German economy to improve much in coming months.
Jennifer McKeown, senior economist at Capital Economics, told Reuters that "the fact that the index is barely positive means that only a slim majority of investors see German economic conditions improving over the next six months."

ZEW’s index for current conditions in Germany also weakened in in September, slipping to 55.1 from 57.6 in August, while its index for expectations in the euro area overall rose, increasing to 5.4 from 4.6.

The German government has forecast that the economy will continue to grow at a moderate pace, and expand by 1.7% this year and 1.5% in 2017.