German investor confidence jumps

11th January 2005, Comments 0 comments

11 January 2005 , BERLIN - German investor confidence bounded ahead for the second consecutive month in January, according to a leading investor confidence index released on Tuesday, signalling confidence that Europe's biggest economy remained on a growth path. Compiled by the Mannheim-based Centre for European Economic Research, the so-called ZEW index kicked off the start of 2005 by rising to 26.9 points in January from 14.4 points in December. The January increase was more than economists had expected

11 January 2005  

BERLIN - German investor confidence bounded ahead for the second consecutive month in January, according to a leading investor confidence index released on Tuesday, signalling confidence that Europe's biggest economy remained on a growth path. 

Compiled by the Mannheim-based Centre for European Economic Research, the so-called ZEW index kicked off the start of 2005 by rising to 26.9 points in January from 14.4 points in December.

The January increase was more than economists had expected who had predicted that the indicator would jump to 18 points as a drop in oil prices and an increase in stock markets helped to underpin the ZEW index.

ZEW chief Wolfgang Franz also pointed to the slide in the euro and optimism among retailers following buoyant Christmas sales as also helping to forge the positive mood among German analysts and institutional investors.

"These are positive signs at the beginning of the year," said Franz releasing the survey.

"We have every reason to believe that consumption and investment will be picking up," he said, with the latest ZEW survey also taken against the backdrop of positive economic news out of the United States.

Speaking ahead of Thursday's European Central Bank meeting and following a meeting of Group of 10 central bankers, ECB chief Jean-Claude Trichet said Monday he was "confident" about global economic growth.

But as a reminder of the fragile state of the upswing in Germany, the ZEW survey's publication coincided with the release of industrial production data showing output in Europe's largest economy slumping by a bigger-than-forecast 1.7 percent in November.

This followed a 2.3 percent drop in November in German factory orders and an increase in December unemployment which pushed the jobless rate up to 10.8 percent from 10.3 percent in November.

Despite the January rise, the ZEW said the indicator was still below its historical average of +34.4 points.

But analysts are somewhat divided about Germany's economic outlook this year with some economists projecting a meagre growth for the country in 2005 of under one per cent while others are predicting a more solid two per cent.

Based on a survey of 305 institutional investors and analysts, the ZEW survey acts as a curtain raiser to the release later in the month of the more broadly based and closely watched German Ifo business confidence survey.

Drawn up by the Munich-based Ifo economic institute, the Ifo business confidence index jumped to an eight-month high in December.

The ZEW survey shows Germany's investment community taking a somewhat upbeat view of the economic climate in the nation at the start of the year with the ZEW indicator gauging conditions in January rising from minus 64.2 points to minus 61.2 points.

Likewise the investors' view of both current economic conditions and future trends for the 12-member eurozone also improved in January.

While the indicator measuring economic expectations in the eurozone jumped 12.2 points to 29.9 points, the index gauging the current economic situation increased from minus 30.2 points to minus 30.0 points.

DPA

Subject: German news 

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