ZEW Indicator of Economic Sentiment September 2004 - Optimism Continues to Fade Away
ResearchThe ZEW Indicator of Economic Sentiment for Germany decreased by 6.9 points in September. The indicator now stands at 38.4 points. Although this value represents a further decline compared to +45.3 points in August, expectations remain above their historical average of +34.8 points. Thus, experts expect a slight medium-term recovery of the economy.
The fading optimism originates in the fact that world-wide economic dynamics will decelerate due to ambiguous economic data from the U.S. This could have a negative impact on Germany's economic strength, since it is mainly driven by exports at present. Domestic demand does not seem to provide any stimulus for the next months to come. The continuing high level of oil prices will tend to limit any possible stimulation of demand. In addition, the deteriorating labour market situation affects economic activity.
In response to an improvement of Germany's industrial production experts are less pessimistic about Germany's present economic situation than last month. The indicator of the current economic situation rose from -65.2 points to -61.5 points.
Economic expectations for the Euro zone continue to worsen in September. The indicator looses -7.3 points compared with last month's figures and now stands at +44.7 points. The corresponding indicator of the current economic situation increased further from -33.5 points to -27.3 points.
298 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.
Contact
Volker Kleff, E-mail: kleff@zew.de
Dr. Michael Schröder, Phone: +49 (0)621 1235-140, E-mail: schroeder@zew.de
Dr. Friedrich Heinemann, Phone: +49 (0)621 1235-149, E-mail: heinemann@zew.de