Link Securities | The ZEW Institute published on Tuesday that its index measuring sentiment about Germany’s economy among large investors and analysts fell in its September reading to 3.6 points from 19.2 points in August, down to its lowest level since October 2023. The FactSet analyst consensus expected a much higher reading of 16.6 points. This brings the index to three consecutive months of declines.
Meanwhile, the ZEW index, which measures the sentiment of both groups on the current state of the German economy, fell in September to -84.5 points from -77.3 points in August, also below the -83.8 points projected by analysts. The reading is the lowest since May 2020.
The drop in sentiment is mainly attributed to several factors: i) the weakening of the manufacturing sector, ii) faltering consumer spending and iii) a series of setbacks for major German companies such as Volkswagen (VOW3-DE) and BMW (BMW-DE). In addition, structural challenges such as unfavourable demographics, high energy costs and increased competition from China also contribute to the decline in economic malaise in the country.
According to the ZEW, the hope for a rapid improvement in Germany’s economic situation is visibly fading, with the number of optimists and pessimists now in balance.
Meanwhile, the ZEW index, which measures the sentiment of major investors and analysts about the eurozone economy, fell in September to 9.3 points from 17.9 points in August, its lowest level in 11 months. In this case analysts had expected a reading of 16.3 points. This brings it to three consecutive months of declines. In September, around 60.9% of the investors and analysts surveyed expected no change in economic activity, 24.2% expected it to improve and 14.9% expected it to deteriorate.
The current economic situation index fell to -40.4 points from -32.2 points. Inflation expectations rose by 10.6 points in September to -28.5.
