Weaker exports, auto scandal weigh on German economic confidence, ZEW says

Experts' outlook for the German economy soured in August amid a weaker than-expected export performance by the country and a widening scandal in the automobile sector.

The ZEW institute's economic confidence index for the euro area's locomotive retreated by 7.5 points to a reading of 10.0, falling short of market forecasts for a reading of 15.0. It was also "significantly" below its historical level of 23.8, ZEW said in a statement.

Commenting on the survey results, ZEW president Professor Achim Wambach said they reflected a high degree of nervousness as regards the future path of the expansion in Germany.

Nonetheless, he added that: "Overall, the economic outlook still remains relatively stable at a fairly high level."

ZEW also pointed out how the 0.6% rate of growth in gross domestic product seen over the second quarter was the "exact average" of that seen for all the member countries of the single currency bloc.

A separate gauge that tracks experts' views on the outlook for the euro area also fell back, by 6.3 points to 29.3. Yet the sub-index linked to their views on the current situation climbed to its highest level since January 2008. In August it rose by 9.7 points to 38.4.

Of the expectations indices compiled by the institute for some of Germany's main trading partners, the only ones which did not decline last month were those for Japan, which was flat, and that for Italy which climbed by 1.2 points.

There was also a large increase in the sub-index which measures expectations for a weaker euro/dollar exchange rate, of 13.9 to 26.6.