The ZEW's January survey shows analysts adopting a surprisingly optimistic view of the German economy in 2017.
To start with, their assessment of current conditions (77.3 after 53.5) saw its largest rise since April 2015 to reach its highest level since July 2011. At the same time, expectations gained 2.8 points to 16.6, its fourth increase in the last six months to record its best reading since August last year.
Today's results suggest that analysts have become more convinced that, after a disappointing third quarter, the German economy is set for a respectable period of expansion. Not only does fourth quarter growth look likely to have at least doubled the previous period's modest 0.2 percent quarterly rate, but forward looking indicators point to a solid start to 2017. The correlation is not high but the ZEW's findings should make for some upside risk to both the upcoming January Ifo and PMI surveys.
The Mannheim-based Centre for European Economic Research (ZEW), asks German financial experts every month for their opinions on current economic conditions and the economic outlook for Germany (as well as other major industrial economies). The responses are synthesised into two simple indices that provide a snapshot of how the economy is seen to be performing.
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.