The ZEW Indicator of Economic Sentiment for Germany published this morning fell considerably by 7.5 points in August 2017. It now stands at 10.0 points, significantly below the long-term average of 23.8 points, says the ZEW.
The ZEW is the Mannheim Centre for European Economic Research. Its indicator of economic sentiment is seen as a leading indicator for the country's economy similar to the arguably better known ifo Index).
The assessment of the current economic situation in Germany increased slightly by 0.3 points in August. The corresponding indicator now stands at 86.7 points. This reflects a high degree of nervousness over the future path of growth in Germany, states ZEW President Professor Achim Wambach.
A combination of weaker than expected German exports and the widening scandal in the German automobile sector in particular have helped contribute to this situation, the professor adds. Overall, though, the economic outlook still remains relatively stable at a fairly high level, he says.
Professor Wambach, courtesy of ZEW
German GDP growing
The latest gross domestic product (GDP) data show that the German economy grew by 0.6 per cent in the second quarter of 2017 compared to the previous quarter. The ZEW notes that this is the precise average of GDP growth across all 19 eurozone member states.
The indicator regarding economic development in the eurozone fell by 6.3 points in August to 29.3 points. The decline of eurozone growth expectations is thus slightly lower than those for Germany, observes the ZEW.
By contrast, the indicator for the current economic situation in the eurozone has climbed significantly. It currently stands at 38.4 points, 9.7 points higher than in July. The indicator has climbed steadily since November 2016 and has now reached its highest level since January 2008, says the ZEW.
Survey's strong pedigree
The survey has a strong pedigree. Up to 300 experts from banks, insurance companies and financial departments of selected corporations have been interviewed about their assessments and forecasts for important international financial market data every month since 1991.
Participants are asked about their six-month expectations concerning the economy, inflation rates, interest rates, stock markets and exchange rates in
- The eurozone
- United States
- United Kingdom
They are also quizzed on oil price expectations. One indicator is created and published from the results of the ZEW Financial Market Survey. The results are published and analysed in the monthly Financial Market Report (only available in German although there is a brief English summary).
Eurozone posts July BoP data
The latest monthly balance of payments figures for the eurozone (for July 2017) were also published this morning, by the European Central Bank. The eurozone current account was in surplus by €25.1bn in July 2017.
This reflected surpluses for
- Goods (€26.4bn)
- Primary income (€10.9bn)
- Services (€2.6bn)
These were partly offset by a deficit for secondary income (€14.8bn). The 12-month cumulated current account for the period ending in July 2017 recorded a surplus of €333.1bn (3.0% of euro area GDP), compared with €373.3bn (3.5% of euro area GDP) for the 12 months to July 2016.
The ECB attributes this to falls in the surpluses for goods (from €367.2bn to €338.6bn) and services (from €63.4bn to €43.3bn). It also cites a widening of the deficit for secondary income (from €123.2bn to €146.5bn). These were partly offset by an increase in the surplus for primary income (from €65.9bn to €97.6bn).