Germany investor sentiment strengthens - ZEW

Investor sentiment ticked higher in Germany this month, a closely-watched survey showed on Tuesday, despite the country’s faltering economy.

The latest ZEW Indicator of Economic Sentiment came in at 12.8, three points up on November’s reading and well above consensus, for 8.8.

The assessment of the current economic situation also improved, by 2.7 points, though it remained firmly in negative territory at -77.1.

Achim Wambach, president of the ZEW research institute, said: “Despite the budget crisis, the assessment of the situation and economic expectations for Germany have once again improved.

“This is due to the fact that the share of respondents expecting interest rate cuts by the European Central Bank in the medium-term has doubled. This, in turn, is good news for the German construction industry, for which we observe significantly more optimistic expectations this month.”

Germany’s economy, which is heavily dependent on the manufacturing sector, shrank by 0.1% in the third sector.

The Eurozone’s biggest economy has been hit hard by higher energy prices following Russia’s invasion of Ukraine, as well as softer global trade.

Melanie Debono, senior Europe economist at Pantheon Macroeconomics, said: “Investor sentiment indicators are a bright spot for Germany and the Eurozone. They have so far been the only indicators positive on the outlook, but the increase in the composite PMI in November suggests maybe the tide is about to turn.

“Overall, these figures leave us confident in our view that Eurozone and Germany GDP will rebound in the new year, after falling against this quarter.”