ZEW's February survey was much more upbeat about the German economy than generally anticipated.
In particular, the current conditions index jumped fully 23.1 points to 45.5, its steepest rise since August 2010 and its highest reading since July last year. At the same time, expectations climbed 4.6 points to 53.0, their fourth increase in as many months and the best level since February 2014.
The surprisingly good results reflect optimism about the likely effects of the ECB's decision to launch QE last month as well as the unexpectedly strong 0.7 percent quarterly gain in German fourth quarter real GDP announced last week. However, it should be noted that survey was taken before the recent breakdown in negotiations between Greece and its creditors.
Nonetheless, Greece aside, the buoyancy of the survey may make for some extra upside potential to the February Ifo and PMI surveys.
The monthly survey, conducted by the Mannheim-based Center for European Economic Research (ZEW), asks German financial experts for their opinions on current economic conditions and the economic outlook for Germany as well as other major industrial economies.
The ZEW Indicator of Economic Sentiment is calculated from the results of the ZEW Financial Market Survey. The ZEW is followed closely as a precursor and predictor of the Ifo Sentiment Survey and as such is followed closely by market participants. The data are available the second week of the month for the preceding month. The survey provides a measure of analysts' view of current economic conditions as well as a gauge of expectations about the coming six months. The latter measure tends to have the larger market impact and reflects the difference between the share of analysts that are optimistic and the share of analysts that are pessimistic. About 350 financial experts take part in the survey.
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