Investor sentiment in Germany slipped in February as uncertainty about the US and emerging economies came to the fore, but the German recovery remains intact, data showed on Tuesday.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 6.0 points to 55.7 points in February, ZEW said in a statement.
"The cautious expectations in this month's survey are likely to be caused by some uncertainties which came to the fore recently," said ZEW president Clemens Fuest.
Weak employment figures as well as some softer leading indicators had sparked concern in the US that the current economic upswing could lose momentum, he said.
Volatile capital markets in some emerging economies reflected uncertainty regarding their economic prospects in the medium term.
Nevertheless, "this month's decline in economic expectations must not be overstated," Fuest insisted.
"The majority of surveyed financial market experts remain optimistic," he said.
For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.
The sub-index measuring financial market players' view of the current economic situation in Germany rose by 8.8 points to 50.0 points in February, its highest level since August 2011.
A frequent criticism of the ZEW index is that it can be volatile and is therefore not particularly reliable.
The latest ZEW reading "gave mixed signals, suggesting that whilst the economic situation is improving slowly, investors are losing some optimism about the future," said Capital Economics economist Paul Hollingsworth.
But Berenberg Bank economist Christian Schulz believed "the latest decline does not point to a change in direction of the economic trajectory yet.
"The negative factors should remain temporary," he insisted.
ING DiBa economist Carsten Brzeski agreed.
"The ZEW index has not the best track record when it comes to predicting German economic activity. However, over the last years, the current assessment component has become a rather good leading indicator for GDP growth.
"In this regard, today's sharp increase of the current assessment component is good news for the economy. The economy should gain further momentum in the first months of the year," Brzeski said.
Natixis economist Johannes Gareis similarly believed the drop in the index this month "must not be overstated."
The rise in the ZEW sub-index of current assessment "is in line with Germany's robust economic development and investors' strong expectations in second half of last year," Gareis said.
"So, while some uncertainties stemming from volatile capital markets in emerging may have contributed to a decline in the ZEW's headline indicator, the take away message from February's ZEW survey is that German investors and analysts remain overtly optimistic," the expert concluded.
Investor sentiment in Germany slipped in February as uncertainty about the US and emerging economies came to the fore, but the German recovery remains intact, data showed on Tuesday.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 6.0 points to 55.7 points in February, ZEW said in a statement.
“The cautious expectations in this month’s survey are likely to be caused by some uncertainties which came to the fore recently,” said ZEW president Clemens Fuest.
Weak employment figures as well as some softer leading indicators had sparked concern in the US that the current economic upswing could lose momentum, he said.
Volatile capital markets in some emerging economies reflected uncertainty regarding their economic prospects in the medium term.
Nevertheless, “this month’s decline in economic expectations must not be overstated,” Fuest insisted.
“The majority of surveyed financial market experts remain optimistic,” he said.
For the survey, ZEW questions analysts and institutional investors about their current assessment of the economic situation in Germany, as well as their expectations for the coming months.
The sub-index measuring financial market players’ view of the current economic situation in Germany rose by 8.8 points to 50.0 points in February, its highest level since August 2011.
A frequent criticism of the ZEW index is that it can be volatile and is therefore not particularly reliable.
The latest ZEW reading “gave mixed signals, suggesting that whilst the economic situation is improving slowly, investors are losing some optimism about the future,” said Capital Economics economist Paul Hollingsworth.
But Berenberg Bank economist Christian Schulz believed “the latest decline does not point to a change in direction of the economic trajectory yet.
“The negative factors should remain temporary,” he insisted.
ING DiBa economist Carsten Brzeski agreed.
“The ZEW index has not the best track record when it comes to predicting German economic activity. However, over the last years, the current assessment component has become a rather good leading indicator for GDP growth.
“In this regard, today’s sharp increase of the current assessment component is good news for the economy. The economy should gain further momentum in the first months of the year,” Brzeski said.
Natixis economist Johannes Gareis similarly believed the drop in the index this month “must not be overstated.”
The rise in the ZEW sub-index of current assessment “is in line with Germany’s robust economic development and investors’ strong expectations in second half of last year,” Gareis said.
“So, while some uncertainties stemming from volatile capital markets in emerging may have contributed to a decline in the ZEW’s headline indicator, the take away message from February’s ZEW survey is that German investors and analysts remain overtly optimistic,” the expert concluded.
