Strong Rise in Expectations

Economic expectations show good growth in July with the ZEW indicator strongly rising by 15.8 points to plus 26.3 points. Assessment of the current economic situation also improves, albeit to a lesser degree. The situation indicator for Germany is at minus 77.6 points, which is plus 3.4 points above the previous month’s reading.

“The economic outlook continues to improve in July; it seems that the reforms are having an effect. Especially the export-oriented sectors as well as domestic demand experience sustained growth. Nevertheless, the uncertainty associated with the developments in the Iran conflict and the oil price remain a crucial factor affecting the prospects for a recovery of the German economy,” comments ZEW President Professor Achim Wambach, PhD on the current survey results.

Most industries improve their balances in July. Particularly in the mechanical engineering industry and the domestic demand, prospects are brighter with plus 14.5 points and plus 14.7 points respectively. The chemical and pharmaceutical industries as well as the metal industry record consistent growth in July, although they clearly remain in negative territory. In contrast to the development observed in June, the balance of the construction industry is up by 12.7 points, approaching the zero line. The automotive sector shows a different picture, however: It declines to minus 46.6 points (minus 11.3 points compared to the previous month).

Expectations for the eurozone increase in July with the indicator exceeding the June reading by 13.9 points and attaining 23.4 points. The assessment of the economic situation continues to be negative but improves by 5.7 points to settle at minus 37.7 points.