ZEW: Poor data cause concern among analysts

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Economic Briefing
ZEW: Poor data cause concern among analysts

The ZEW Index for economic expectations in Germany tumbled from 48.5 to 36.3 in April, which was a stronger fall than expected by most analysts. The camp of economic optimists has clearly shrunk. This was probably caused by the decline in sentiment indicators in March and the poor data from German industry. Even so, we still expect the German economy to pick up considerably in the coming months. This is likely to be confirmed by the purchasing managers’ index and the Ifo business climate – due next week – that should recover from March-setbacks.

Analyst:
Ulrike Rondorf

Eco Analysis - German ZEW survey fell in April (H. Amourda, B. Hilliard)

Eco Analysis - German ZEW survey fell in April (H. Amourda, B. Hilliard)

■ German ZEW survey fell in April

Waiting for the WEO of the IMF, some key economic data were released this Tuesday. The German ZEW survey (economic sentiment) fell for the first time since November 2012, from 48.5 to 36.3 in April. On the inflation side, the final euro aggregate CPI inflation confirmed the flash estimate at 1.7% yoy while the UK CPI printed at 2.8% yoy in March. Looking ahead, we will watch closely the UK labour data and MPC minutes due to be released on Wednesday.

The German ZEW survey reported a fall in both current situation (down 4.4 points to 9.2) and economic sentiment (down 12.2 points to 36.3). The Cyprus bail-in and questions on the euro area crisis management probably affected investors' sentiment. However, the balance of answers is still positive and points to an improvement of the economic growth in the next six months. Moreover, it is too early to expect a continued downward trend in sentiment given some recent positive hard data, but confirms our view of weaker growth in Q2.