German investor sentiment improves less than expected in March

German economic sentiment improved a little less than expected in March, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.

The index of economic sentiment increased to 12.8 from 10.4 the month before, but this was below analysts' expectations for a reading of 13.1 and the long-run average of 23.9.

Meanwhile, the current situation index edged up to 77.3 from 76.4 in February, below the consensus forecast of 78.0.

ZEW President Professor Achim Wambach said: "The fact that the ZEW Indicator of economic sentiment only shows a slight upward movement is a reflection of the current uncertainty surrounding future economic development. With regard to the economic situation in Germany, no clear conclusions can be drawn from the most recent economic signals for January 2017.

"While industrial production and exports witnessed a positive development, the figures for incoming orders and retail sales were less favourable. The political risks resulting from upcoming elections in a number of EU countries are keeping uncertainty surrounding the German economy at a relatively high level."

Pantheon Macroeconomics said: "An only modest increase in investor expectations, indicating that political uncertainty perhaps is starting to weigh on markets’ outlook. Investors’ inflation expectations fell sharply, consistent with the likely waning boost to headline inflation from base effects in oil and high food inflation.

"In addition, expectations for EZ equities slipped, but the hit was mainly due to a weaker outlook in Germany. Expectations in France and Italy rose. Across industries, expectations rose the most in the chemical sector, but fell sharply for utilities."