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German ZEW sentiment jumps as economic recovery optimism lifts outlook
The ZEW Economic Sentiment index rose to 26.3 in July from 10.5, while the Current Situation index improved to -77.6 from -81.0, reinforcing a firmer tone for Germany and the Eurozone.
Investor confidence in Germany improved sharply in July, with the ZEW Indicator of Economic Sentiment climbing to 26.3 from 10.5, the highest level since February and above forecasts of 15.1, according to Action Forex.
The ZEW survey also showed a modest improvement in the Current Situation Index, moving to -77.6 from -81.0, suggesting investors see Germany’s recovery as gaining traction even though conditions start from a weak base.
ZEW President Achim Wambach attributed the improving outlook to the positive impact of recent economic reforms, with export-oriented industries and domestic demand showing sustained growth. Sector readings were broadly higher for mechanical engineering, domestic demand, construction, and the chemical, pharmaceutical, and metal industries, though automotive sentiment fell further to -46.6.
Action Forex also noted the survey’s caution around external risks. Wambach warned that developments in the Iran conflict and elevated oil prices remain significant threats to Germany’s recovery prospects, while confidence across the Eurozone strengthened, with the Economic Sentiment index rising to 23.4 from 9.5 and the Current Situation Index improving to -37.7.