ZEW Indicator of Economic Sentiment - Stabilization at a High Level

The ZEW Indicator of Economic Sentiment for Germany dropped slightly by -1.2 points in February. Compared with +71.0 points in January, the indicator's current level of 69.8 points is far above its historical average of +34.9 points.

This month positive and negative news have more or less balanced out. The robust economic situation of the world economy and a favourable euro-dollar exchange rate have increased the profit expectations of German exporting companies but weak order intake is likely to have had a negative effect on the indicator.

"This result shows that the optimism of the financial market experts surveyed has stabilized at a high level. The investment climate in Germany remains positive. The decline of domestic order intake therefore seems to be only of a temporary nature. This altogether positive development should however not be jeopardized by excessive wage bargaining policies", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.

In the light of rising profits for domestic companies the experts surveyed take a much more optimistic view of Germany's current economic situation. The corresponding indicator is up from -31.6 points to -19.5 points in February.

Economic expectations for the euro zone have slightly decreased in February. The indicator now stands at 66 points after 66.1 points in January. This month the corresponding indicator for the current economic situation in the euro zone has seen a rise of 3.8 points to -6.1 points.

303 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 from January, 23 to February, 13, 2006 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 horizontal line indicates the historical mean of the indicator.

Contact

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

Matthias Köhler, E-mail: koehler@zew.de