German economic sentiment unexpectedly deteriorates in May

German investor confidence unexpectedly deteriorated in May, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.

The indicator of economic sentiment declined 4.8 points from the previous month to 6.4, versus expectations for an increase to 12.0.

The current situation index, however, rose 5.4 points to 53.1, beating forecasts for a reading of 47.9.

The indicator of economic sentiment for the Eurozone, meanwhile, fell by 4.7 points in May to 16.8, undershooting expectations of 23.4.

“The strong growth of the German economy in the first quarter of 2016 appears to have surprised the financial market experts. However, they seem not to expect the economic situation to improve at the same pace going forward,” said Professor Achimecononi Wambach, PhD, President of ZEW.

“Uncertainties regarding developments such as a possible Brexit currently inhibit a more optimistic outlook."

Pantheon Macroeconomics said: “A downbeat headline, indicating that investors’ worry over sluggish earnings, Brexit risks and slow global growth continues to outweigh the boost from easy monetary policy.

“Overall, the survey implies that the strong economic momentum in Q1 will not be sustained, in line with the message from the more widely watched IFO survey. The dip in the headline expectations index also point to downside risks for tomorrow’s IFO expectations gauge.”