Declining Economic Expectations

Economic expectations decline in October after a steady improvement over the summer. The ZEW indicator falls by 6.6 points and reads now plus 28.1 points. By contrast, assessment of the current economic situation once more increases strongly. The situation indicator for Germany is at minus 35.9 points and thus exceeds the previous month’s value by 11.2 points.

“The German economy is slowly emerging from stagnation, but the recovery is not self-sustaining. Private consumption and investment remain weak because of high energy prices: They put real incomes under pressure, increase production costs and keep inflation higher for longer,” comments ZEW President Professor Achim Wambach, PhD on the current survey results.

The beginning of the fourth quarter presents a mixed picture across industries. Banks and insurance companies – lately among the industries recording strong increases – show a substantial decline of minus 18.4 and minus 9.0 points respectively in October. However, with 34.5 and 37.4 points, they stay clearly in positive territory. A contraction can also be seen in the service sector (minus 6.8 points compared to the previous month) and the telecommunications industry (minus 8.2 points). Prospects for private consumption are deteriorating. In contrast, positive signals are visible in the steel and metal manufacturing sectors and in the electronics industry.

Expectations for the eurozone decline again in October. At plus 18.5 points, the index is minus 7.3 points below the previous month’s reading. The assessment of the economic situation remains largely unchanged at minus 14.8 points (minus 0.9 points compared to September).