ZEW Indicator of Economic Sentiment - Indicator Continues to Move Sideways

The ZEW Indicator of Economic Sentiment for Germany decreases slightly in November by -0.7 points. Compared with +39.4 points in October, the indicator's current level of +38.7 points is still above its historical average of +34.3 points.

This month, positive and negative factors are more or less in balance. The fall in the oil price, the favourable Euro-Dollar exchange rate and, above all, the current order intake signalling a dynamic development of future industrial production have a positive impact. Yet the main demand incentives still come from abroad. Thus, domestic demand continues to be the Achilles' heel of the German economy. The unclear direction of economic policy and in particular the planned rise of the value-added-tax are undermining the confidence of uncertain consumers. "There will be no clear and sustainable increase in employment without deeper reforms of the labour market and the fiscal and health care systems. Job creation is indispensable for a self-supporting recovery of the economy enabling Germany to generate more growth", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

Thanks to a remarkable increase in industrial production, the experts surveyed again take a much more optimistic view of Germany's current economic situation. The indicator of the current economic situation is up from -58.0 points to -55.2 points in November.

Economic expectations for the euro zone have also improved in November. The indicator gains +5.3 points compared with last month's figures and now stands at +40.0 points. The corresponding indicator for the current economic situation in the euro zone increases only slightly by +1.4 to -25.5 points.

326 analysts and institutional investors participated in this month's ZEW Financial Markets Survey which is conducted on a monthly basis by the Centre for European Economic Research (ZEW), Mannheim. The participants were asked about their medium-term expectations concerning economic activity and capital markets. The ZEW Indicator of Economic Sentiment shows the balance between positive and negative expectations regarding future economic activity in Germany within a timeframe of six months. The solid line indicates the historical mean of the indicator.

Contact

Volker Kleff, E-mail: kleff@zew.de

Dr. Sandra Schmidt, E-mail: s.schmidt@zew.de