ZEW's February survey extended January's improvement in analysts' views about both the current and expected state of the German economy. Moreover, both measures were on the strong side of the market consensus.

The current conditions gauge rose a very solid 13.5 points to minus 45.1, its fourth consecutive advance and its highest level since last June but still well short of the levels seen prior to Russia's invasion of Ukraine. At the same time, economic sentiment (expectations) jumped 11.2 points to 28.1, its fifth straight increase. This was only the second positive reading since February last year but the gauge is now nearly 7 points above its historic norm.

The February results would seem to confirm a marked shift in sentiment about German economic prospects. Weaker energy prices and the reopening of the Chinese economy, Germany's most important export market, will be important factors. As the PMI survey released earlier this morning made clear, the economy as a whole remains sluggish but with the German ECDI at 16 and the ECDI-P at 20, economic activity in general is now performing rather better than expected.

Current conditions are expected to improve in February to minus 51.0 versus minus 58.6 in January. Expectations (economic sentiment), which surged more than 40 points and back into positive ground in January, are expected to rise another 3.6 points to 20.5.

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 around mid-month for the current 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.