There is growing optimism about the direction of the German economy. But the picture of conditions here and now remains bleak.
That is the message from the monthly ZEW survey for June, which is based on a poll of experts from banks, insurers and large financial companies. A total of 190 analysts took part in the survey, conducted between June 8 and 15.
The survey contains two key readings. One measures expectations for the German economy over the next six months. The other measures how respondents assess the current economic situation in Germany.
Brighter outlook
It is the forward-looking measure that has made a marked jump in June. The ZEW indicator for Germany rose by 20.7 points to 10.5 points. That means more respondents now expect the economy to improve than to deteriorate.
The assessment of current conditions moved the other way. The indicator for Germany’s present economic situation fell by 3.2 points to minus 81 points, showing that a large majority of respondents still see the economy as weak.
The survey therefore sends two signals at once. Experts have become more optimistic about the next six months, while continuing to judge Germany’s current economic position as highly fragile.
According to ZEW president Achim Wambach, the improvement in expectations is linked to hopes that the conflict with Iran is nearing an end. That could ease pressure on energy prices and inflation, he said, benefiting energy-intensive companies and households and strengthening domestic demand.
Rate rise weighs on construction
Several German industrial sectors reported improved expectations in June, although many remain in negative territory. The automotive sector rose by 21.9 points after several months of decline, while chemicals and pharmaceuticals increased by 16 points. Mechanical engineering rose by 9.2 points, and expectations for private demand improved by 11.7 points.
Construction moved in the opposite direction. The sector’s expectations indicator fell by 15.2 points to minus 12 points. ZEW said the European Central Bank’s interest rate rise on June 11 was likely to have contributed to the decline.
The ZEW survey for the eurozone shows a similar split. Expectations for the next six months rose by 18.6 points to 9.5 points. The assessment of the current economic situation, however, remained negative, falling to minus 43.4 points.
