DE: ZEW Survey

Tue Jan 23 04:00:00 CST 2018

Consensus Actual Previous
Bus. Expectations 17.8 20.4 17.4
Current Conditions 89.8 95.2 89.3

According to ZEW's new survey, analysts remained very upbeat about the German economy at the start of 2018. Indeed, January's assessments of current conditions and the outlook were both significantly more optimistic than in December and well above the market consensus.

The current conditions measure advanced fully 5.9 points to 95.2. This was the fifth rise in the last six months and put the index at a new post-Great Recession high. At the same time, expectations increased 3 points to 20.4, more than reversing December's 1.3 point decline, to stand at an 8-month peak.

The January results are consistent with the bullish picture painted by leading economic indicators at the end of 2017. Much of the optimism is probably down to the booming manufacturing sector but if today's results accurately reflect renewed strength in services, prospects for first quarter GDP would be very good indeed. Tomorrow's flash January PMI survey will offer some useful clues here.

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.