German ZEW economic sentiment edges higher in October

Economic sentiment in Germany continued to improve in October, but not as strongly as most had expected.

The monthly survey by the ZEW economic institute showed its economic sentiment index rose to 17.6 points in October, up from 17 in September, but failing to reach the 20 mark that market analysts had forecast.

Its index of current conditions dipped to 87 from 87.9, two points shy of the 89 level analysts had expected.

Wider results for the eurozone showed that its economic sentiment index fell to 26.7 in October, from 3.7 in September and missed by some way expectations of a rise to 34.2.

ZEW president

"The improved outlook for the coming six months is not least the result of the surprisingly positive growth figures seen in the previous months," said Achim Wamback, president of the ZEW."

He added: "In August, figures for both production and incoming orders were significantly better than expected. The framework conditions for German exports, which have already seen a significant rise, are further improved by positive growth figures for Europe.

"The fact that the inflation rate is rising again, and expected to climb further, equally points towards a positive economic development in Germany, making a change in the ECB’s monetary policy more likely."

Market reaction

The euro was weaker against the pound, falling 0.3% to €1.1271, and lost 0.4% against the dollar to $1.1756.

On equity markets, the German Xetra Dax index was down 0.1% at 12,992.55.