Analysts were a little more upbeat about the German economy than generally anticipated in November according to the new ZEW survey.
The current conditions index fell for a second consecutive month but, at 54.4, by less than a point. Even so, this was still its softest reading since February and nearly 16 points short of April's high. However, expectations were surprisingly robust, climbing 8.5 points to 10.4, their first increase in some eight months albeit still their second weakest print in a year.
Both indices are consistent with what appears to have been some underlying loss of economic momentum in recent months. Third quarter GDP growth (flash estimate 0.3 percent) was disappointingly sluggish and the limited information available so far suggests nothing much better in the current period. That said, ZEW did point out that economic pessimism does not appear to have increased in the wake of last Friday's terrorist attacks in Paris.
The bottom line is that the German economic recovery remains stuck in a relatively low gear and as such will be of limited benefit the rest of the Eurozone. ECB easing expectations for December will be unaffected by today's results.
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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