ZEW's September survey produced mixed results. On the positive side analysts have become slightly happier with the way in which the domestic economy is currently performing. However, expectations for future growth have been downgraded.
The current conditions index rose nearly 2 points to a stronger than anticipated 67.5, its third consecutive increase and its highest reading since April. Expectations on the other hand were down a surprisingly large 12.9 points at 12.1, their sixth straight decline and the sharpest over the period. This was also their weakest posting since November last year.
The more cautious future assessment in part reflects worries about recent developments in the emerging markets and the potential for additional fallout should the Fed tighten this week. With exports a key driving force behind what was ultimately a disappointingly small 0.4 percent increase in total output last quarter, ZEW has become more concerned about where growth will be generated over the rest of the year.
Today's results probably make for some slight downside risk to the flash PMI surveys due next week.
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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