German investor sentiment improves in January - ZEW
German investor confidence improved more than expected in January, according to the latest survey from the ZEW Center for European Economic Research in Mannheim.
The current situation index rose to 95.2 from 89.3, exceeding expectations for a reading of 89.8 and hitting its highest level since the survey began in 1991.
Meanwhile, the indicator of economic sentiment increased to 20.4 from 17.4 the month before, beating expectations of 17.8.
The indicator of economic sentiment for the eurozone increased to 31.8 in January from 29.0 in December, coming in ahead of expectations for a reading of 29.7.
Professor Achim Wambach, President of ZEW, said: "Private consumption, which was the most important driver of economic growth in 2017, is likely to continue to stimulate growth in the coming six months according to the survey participants. The assessment of the global economic environment in Europe and the USA is also much more favourable than it was at the end of 2017."
Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said this is a good start to the year for eurozone investor sentiment.
"A solid headline to start the year, but not a game-changer compared to the average level of the expectations index of about 18.0 in the past four months. Investors' sentiment in the eurozone and Germany is solid enough, but the headline equity indices have struggled to make much headway in local currency terms recently, due to weaker dollar.
"The current situation index is now at a record high, but the expectations index is a better short-term indicator, and it is currently well off its previous high. Indeed, a widening spread between a soaring current situation index and stable expectations usually is a negative sign in these data. The details show that investors’ interest rate and inflation expectations have increased, albeit marginally, while their bullish outlook for the euro has waned slightly. Expectations for equity markets rose across the board, and remain solidly positive, except for the FTSE 100 in the UK."
Stephen Brown, European economist at Capital Economics, said: "As most survey responses will have been received before the SPD voted on Sunday to proceed with coalition negotiations, the ESI might receive a further boost next month if there is progress towards forming a German government.
"After all, based on the preliminary discussions, a grand coalition government would probably deliver a small fiscal boost. Against the backdrop of positive investor sentiment, we see German GDP rising by a consensus-beating 2.7% this year."