| Consensus | Actual | Previous | |
|---|---|---|---|
| Current Conditions | -60.0 | -59.5 | -56.5 |
| Economic Sentiment | -10.2 | -14.7 | -8.5 |
Highlights
ZEW's July survey found analysts increasingly negative about the current and prospective state of the German economy.
Following a 21.7 point slump in June, the current conditions index dropped a further 3.0 points to minus 59.5. This was broadly in line with the market consensus but the third straight fall and a 7-month low. Economic sentiment (expectations), which rose 2.2 points at quarter-end, declined a surprisingly steep 6.2 points to minus 14.7, also its worst reading so far in 2023.
The German economy remains one of the weakest in the Eurozone but with annual local wage growth on some measures in excess of 6.0 percent, this will not trouble the ECB. Indeed, the Bundesbank is likely to be amongst the most vocal of Eurozone central banks calling for additional rate hikes at this month's policy setting meeting. To this end, the German ECDI and ECDI-P now stand at minus 15 and minus 18 respectively, both measures showing that economic activity in general is underperforming market expectations.
Following a 21.7 point slump in June, the current conditions index dropped a further 3.0 points to minus 59.5. This was broadly in line with the market consensus but the third straight fall and a 7-month low. Economic sentiment (expectations), which rose 2.2 points at quarter-end, declined a surprisingly steep 6.2 points to minus 14.7, also its worst reading so far in 2023.
The German economy remains one of the weakest in the Eurozone but with annual local wage growth on some measures in excess of 6.0 percent, this will not trouble the ECB. Indeed, the Bundesbank is likely to be amongst the most vocal of Eurozone central banks calling for additional rate hikes at this month's policy setting meeting. To this end, the German ECDI and ECDI-P now stand at minus 15 and minus 18 respectively, both measures showing that economic activity in general is underperforming market expectations.
Market Consensus Before Announcement
Current conditions are expected to fall in July to minus 60.0 versus June's minus 56.5 which was far lower than expected. Expectations (economic sentiment) are expected to fall to minus 10.2 versus June's minus 8.5.
Definition
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.
Description
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.
