ZEW's April survey again found analysts becoming more confident about the state of the German economy with both the current conditions index and its expectations counterpart posting fresh gains. That said, versus the market consensus the results were slightly mixed.

The current conditions gauge rose a further 1.3 points to minus 79.2, its second successive increase and a 3-month high but just short of the market forecast. It is also still well down on its pre-Covid mark (minus 15.7). However, the recovery in economic sentiment (expectations) continued apace with the measure climbing 11.2 points to a surprisingly firm 42.9. This is its ninth consecutive increase and its strongest print since February 2022.

Analysts are clearly seeing light at the end of the tunnel for the German economy. Even so, the current position is still weak and first quarter GDP growth will be very sluggish at best. The April results trim the German RPI to minus 9 and the RPI-P to 4, indicating a limited degree of overall economic underperformance due to the surprising weakness of prices.

Current conditions are expected to firm to minus 79.0 versus March's minus 80.5 which was up more than a point from February and on the strong side of forecasts. The report's expectations component (economic sentiment) is seen at 34.0 versus March's 31.7 which marked a nearly 12 point jump and the highest level since February 2022. The expectations component has exceeded expectations for eight months in a row.

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.