Germany’s closely-followed ZEW Indicator of economic sentiment unexpectedly ended its string of eight-consecutive monthly increases, falling from 44.8 in June to 39.5 in July. The historic average is 26.3.
The Center for European Economic Research (CEER) said “considerable risk for the future development of the German economy is whether lending to firms and households works out.
“In contrast, the surprisingly positive figures for incoming orders and industrial production have positively affected business expectations.”
Those of you who have viewed my comments in the past know I believe analysts got way ahead of themselves. The survey began to reflect improving levels of confidence in November just as the impact of the credit crisis was ready to cripple economic output in Europe’s largest economy.
And from the chart above, you can see the large swings that have occurred in sentiment over the decade. Germany’s IFO appears to be doing a better job reflecting current and future expectations and has not been subjected to the big mood swings seen in the ZEW.
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