German economic sentiment holds steady in September, misses forecasts

The index of investor and analyst expectations came in at 0.5, in line with the previous month but falling short of analysts’ expectations for an improvement to 2.5.

The current expectations index, meanwhile, declined to 55.1 in September from 57.6 in August, missing expectations for a reading of 56.0.

ZEW President Professor Achim Wambach said: "The current ambiguity of economic impulses from Germany and abroad means that forecasts for the next few months are difficult. German exports, particularly to non-EU countries, as well as industrial production figures have disappointed.

“By contrast, the economic environment in the European Union is improving. Overall, the ZEW indicator of economic sentiment suggests that the economic situation in Germany will remain favourable in the coming six months.”

Pantheon Macroeconomics said: “A slightly disappointing headline given the modest increase in equity prices over the survey period, and risks are tilted to the downside next month given the very recent rise in volatility. Overall, the survey is telling a story of investor scepticism despite the solid rebound in German and EZ equity indices since the end of June. Looking across the survey’s details of economic expectations, analysts’ inflation outlook slipped slightly, but their expectations of long-term rates rose.

“Across industries, analysts’ were more downbeat on their outlook for the key auto sector, but expectations increased in the construction industry which is a key metric given this sector’s importance for private investment.”