Germany Expectations Current Conditions
————————————————————-
April +23.4 +40.7

MNI survey median: +20.0 +34.0
MNI survey range: +14.0 to +26.5 +35.0 to +50.0

March +22.3 +37.6
—

FRANKFURT (MNI) – Investors’ outlook for the German economy in the
next six months unexpectedly improved further in April, while their
assessment of the current situation also surprised to the upside, the
Centre for European Economic Research (ZEW) reported on Tuesday.

Improving for the fifth consecutive month, the ZEW’s economic
sentiment indicator rose 1.1 points to 23.4, its highest level since May
2010

In a press release, ZEW President Wolfgang Franz noted that
analysts remained optimistic regarding Germany.

“However, the sideward movement of the index in April shows that
economic optimism suffers from considerable risks such as the economic
slowdown of important trading partners, the rise of prices for crude
materials and the sovereign debt crisis in the Eurozone,” he said.

The ZEW’s current situation index increased to 40.7 in April, a
seven-month high and up 3.1 points from March.

While the German economy appears still to be heading towards
recovery, recent indicators show that the pace is slowing. March’s
composite PMI (51.6) slipped to its lowest level in three month on the
back of contracting factory output and slowing growth in services.

“Germany is unique among the euro area ‘big four’ in recording an
expansionary PMI number on average in Q1,” Markit Senior Economist Tim
Moore said regarding the PMI figure. “A slower increase in output during
March nonetheless leaves the survey consistent with a rather pedestrian
0.2% quarterly rise in German GDP.”

The PMI also highlighted a number of risks ahead for the private
sector, including lower demand and high oil prices pinching profit
margins, which in turn could hamper both investor and business
confidence down the road.

Last month’s Ifo survey showed manufacturers assessing their
six-month outlook more favourably and still looking to add to staff,
albeit less quickly than in February.

Retailers were also more optimistic regarding the next six months,
the Ifo survey noted. Conversely, business expectations in wholesaling,
construction and services fell back.

For the Eurozone as a whole, economic expectations rose 2.1 points
to 13.1, its best result since May. Bucking the trend, the current
situation fell back 0.6 point to -49.0.

Earlier this month, Sentix reported that its Eurozone investor
sentiment indicator fell in April for the first time in four months,
with declines in both the current situation and expectations components.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —

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