DE: ZEW Survey

Tue Mar 20 05:00:00 CDT 2018

Consensus Actual Previous
Current Conditions 90.0 90.7 92.3
Bus. Expectations 13.0 5.1 17.8

ZEW's March survey found analysts still generally upbeat about the current state of the German economy but notably less confident about the outlook. Overall, the results were on the soft side of the market consensus.

The current conditions index decreased 1.6 points to 90.7, its second consecutive fall versus its January peak (95.2) but still historically very firm. However, expectations were trimmed more significantly, declining a sizeable 12.7 points to 5.1. This was their third drop in the last four months, the sharpest decline since July 2016 and their weakest level since September 2016.

March's less optimistic findings are in keeping with business surveys that have pointed to some, albeit only minor, deceleration in economic activity since the start of the year. Thursday's flash PMI results for March will provide some clues as to whether or not the more cautious assessment is justified.

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.