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German investor confidence rises as economic recovery consolidates
(Bloomberg) — Investor confidence in the German economy rose for a tenth month, reflecting optimism that growth is returning after more than a year of near-stagnation.
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A ZEW expectations gauge rose to 47.1 in May from 42.9 in April — higher than the 46.4 seen by analysts in a Bloomberg survey. A measure of current conditions also surpassed estimates.
“Signs of an economic recovery are growing, reinforced by improved assessments of the eurozone overall and China as a key export market,” said ZEW president Professor Achim Wambach in a statement. “The increase in optimism is reflected, in particular, in the strong increase in expectations for domestic consumption, followed by the construction and machinery sectors.”
The outlook for Europe’s largest economy has improved recently, with surveys pointing to an improving mood, especially in the services sector. Consumers benefiting from slower inflation and rising incomes are expected to be a key force behind this year’s recovery.
However, persistent weakness in Germany’s important industrial sector highlights the current fragility. Industrial production fell for the first time in a year in March, while orders fell unexpectedly.
Interest rate cuts by the European Central Bank are expected to provide some relief, although their impact will only be felt at the end of the year. Analysts are also counting on global demand to boost German exports.
–With assistance from Joel Rinneby and Kristian Siedenburg.
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