The ZEW's May survey suggests that analysts have become a little more cautious about the German economy since last month.
That said, in falling 4.5 points to 65.7, the current conditions index retraced only a fraction of April's 15.1 point bounce and still shows its second highest level since June 2014. Indeed, this was the first decline since last October. However, expectations were also trimmed, the sub-index here losing a sizeable 11.4 points following a 1.5 point decline in April. At now 41.9, its new level was the weakest so far this year.
The less optimistic tone of today's results would seem to reflect the economy's surprisingly soft start to the year together with recent market turbulence, notably in the fixed income markets. Even so, current readings on both indices are high enough to indicate that confidence in the economic recovery remains solid.
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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