Germany economic sentiment worsens - ZEW

German economic sentiment worsened significantly in October, a closely-watched survey showed on Tuesday.

The ZEW economic research institute said its investor expectations index had increased slightly, by 2.7 points to -59.2. Analysts had been expecting it to fall to -65.7.

But the assessment of the current economic situation in Germany - the European Union’s biggest economy - fell sharply again, by 11.7 points to -72.2. Consensus had been for a smaller fall, to -68.0.

Achim Wambach, ZEW president, said: "The ZEW Indicator of Economic Sentiment rises slightly in October. However, the current economic situation is once again assessed as significantly worse than in the previous month. The probability that real gross domestic product will decline in the course of the next six months has also increased considerably.

"Overall, the economic outlook has deteriorated again."

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: "One month does make a trend, but this is the first time in a while we’ve seen a rebound in expectations with the current conditions index falling. This is what usually happens at bottoms, but we need more data to be convinced this is a turning point.

"The reality remains that investor sentiment, both expectations and the current assessment, remain deeply depressed."

Vistesen said the expectations index had been likely buoyed by improved dynamics in the energy market, which has benefited from a fall in gas prices, rising inventories and relatively mild weather.

"All three hint that Germany and Europe will suffer somewhat less this winter than initially feared," he noted. "This is early days, however, so we shouldn’t count our chickens just yet."

Up to 300 employees at banks, insurance companies and the financial departments of selected corporations are surveyed for the monthly ZEW Indicator of Economic Sentiment.