Germany’s ZEW indicator for economic sentiment dove into negative territory in September, hitting a reading of -4.3, after being at 14 the previous month and averaging 27.2 historically according to ZEW.
Consensus had expected a reading of 10 according to Bloomberg, so this is a ‘miss’.
After a strong growth in the second quarter of this year, industrial production in Germany stagnated in July. There was also a decline in incoming orders compared to the previous month. This may not only indicate a temporary slowdown but could well be the first sign of a flattening of
economic activity. Likewise, the financial market experts surveyed by ZEW do not expect capacity utilisation of the German economy to improve further during the next half year. The reasons for this could be the expiring of economic stimulus measures in many countries and the fact that many industrialised countries have not yet recovered from the crisis. This puts pressure on the export-oriented sectors.
“In their expectations, financial experts put more weight on risks than they did before. These are for example the slowdown of the US growth and the yet unresolved problems in the euro zone which are for instance reflected by the large interest rate spreads for Greek government bonds.
Nevertheless, the risk of a double dip remains low for Germany”, says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.