BERLIN (Reuters) – German investor sentiment unexpectedly improved in August, economic research institute ZEW said on Tuesday, but remains firmly anchored in negative territory as sentiment remains subdued in Europe’s biggest economy. ‘Europe.
The ZEW business climate index fell from -14.7 points in July to -12.3 points. Analysts polled by Reuters had expected the index to stagnate in August.
According to ZEW Chairman Achim Wambach, this slight improvement indicates that investors expect the situation in Germany to improve by the end of the year.
A brighter outlook for the U.S. economy and anticipation of an end to rate hikes in the euro zone and the U.S. helped improve the outlook for Germany, he added.
“However, these upgraded expectations should be seen in the context of a significantly deteriorated perception of the current economic situation in Germany.”
The index measuring the perception of the current situation in Germany plunged more than expected in August, to -71.3, against -59.5 the previous month. Analysts had forecast an index of -63.0 for August.
“The slight improvement in economic expectations is positive news, at least on the surface,” commented Elmar Voelker, chief fixed income analyst at LBBW Research.
“However, the further deterioration in the perception of the current situation underlines the fact that this stabilization comes from an extremely degraded starting position. Recession fears remain high,” he added.
The German economy stagnated in the second quarter of 2023 as falling purchasing power, higher interest rates and shrinking order books weighed on the euro zone’s largest economy.
August’s ZEW results likely foreshadow stagnation in other indicators of economic sentiment, particularly the Ifo business climate index due next week, analysts said.
“Waiting for a turnaround in economic sentiment is like waiting for Godot,” said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe.
(Written by Miranda Murray, French version Corentin Chapron, editing by Kate Entringer)
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