Investor sentiment continues to improve in Germany - survey

German investor sentiment rose in June, on hopes that the country’s economic slump will have troughed by the end of summer, a closely-followed survey showed on Tuesday.

The ZEW Indicator of Economic Sentiment increased for the third consecutive month in June, to 63.4. That was a rise of 12.4 points on May, and ahead of consensus for around 60.0.

The assessment of the current economic situation was -83.1, a 10.4-point narrowing on the previous month and the first improvement since January.

Achim Wambach, ZEW president, said: “There is growing confidence that the economy will bottom out by summer 2020. This is reflected in the renewed rise of the ZEW Indicator of Economic Sentiment, as well as the more optimistic assessment of the current situation.”

However, he conceded that earnings expectations varied significantly between sectors, and that they remained “strongly negative” in export-orientated sectors such as car manufacturing and mechanical engineering.

Germany, the Eurozone’s biggest economy, is heavily reliant on manufacturing and exports, and has been rocked by the collapse in global demand caused by the Covid-19 pandemic.

Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics, said: “The further increase in the ZEW expectations gauge continues to track the rally in equities. Granted, markets have wobbled recently, but every time they do, policymakers pull another rabbit out of their hats.

“Until that changes, or the virus returns in an uncontrollable fashion in Europe, we think the upward trend will continue, albeit at a slower rate than in the past few months.”

Financial experts surveyed by ZEW on the economic development of the Eurozone also reported an improvement in sentiment, with the corresponding indicator rising 12.6 points to 58.6 month-on-month. The indicator for the current economic situation of the Eurozone improved marginally to -89.6 points.