German ZEW economic sentiment improves less than expected in January

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

The index of economic sentiment increased to 16.6 from 13.8 the month before, but this was below analysts’ expectations for a reading of 18.3.

However, the current situation index rose to 77.3 in January from 63.5, beating expectations for a reading of 65.0.

ZEW President Professor Achim Wambach said: "The slight increase of the ZEW indicator of economic sentiment is mainly due the improved economic situation across European countries.

“The fairly good preliminary figures recorded for the development of the German GDP last year, as well as for the industrial production of the eurozone in November 2016, came as a surprise to many. This improvement in expectations can thus also be seen as a leap of faith for 2017.”

Pantheon Macroeconomics said: "Investors in Germany and the eurozone remain in an upbeat mood, but the expected announcement of a 'hard' Brexit by UK PM Theresa May today could well be a catalyst for a more cautious stance by investors.

"Across the main markets, investors’ interest rate expectations rose, but the outlook for equities slipped. In addition, investors pared back their expectations of a stronger dollar. Across industries, sentiment improved mainly for car producers and telecoms. It deteriorated in banks and insurance."