German investor confidenceslumped in September

14th September 2004, Comments 0 comments

14 September 2004 , BERLIN - German investor confidence dropped sharply in September, a key economic indicator released Tuesday showed amid concerns about the impact of high oil prices on consumer demand and the outlook for the global economy. Compiled by the Mannheim-based Centre for European Economic Research, the so-called ZEW index dropped to 38.4 points in September compared to 45.3 points in August. In July the index stood at 48.4. The fall in September was far more than forecast by economists who ha

14 September 2004

BERLIN - German investor confidence dropped sharply in September, a key economic indicator released Tuesday showed amid concerns about the impact of high oil prices on consumer demand and the outlook for the global economy.

Compiled by the Mannheim-based Centre for European Economic Research, the so-called ZEW index dropped to 38.4 points in September compared to 45.3 points in August. In July the index stood at 48.4.

The fall in September was far more than forecast by economists who had expected the index to come in at 45.0 points this month. The ZEW index is now at its lowest point in more than a year.

In releasing the survey, the ZEW said that the fading optimism was caused by worries that ambiguous U.S. economic data would result in slower global growth. This in turn could have a negative impact on Germany's export machine which has been the key driving force behind the pickup in Europe's biggest economy.

The ZEW went on to warn that domestic demand would not provide any economic stimulus in the coming months with continuing high oil prices and a weak labour market hitting consumer sentiment.

Unemployment in Germany remains stuck above 10 per cent with the numbers out of work rising by a seasonally adjusted 24,000 in August. This also coincided with a major push by Germany's big companies to extend working hours without increasing pay.

Equities fell and the euro declined against the dollar following the release of the latest ZEW survey, which also came as world energy prices began to creep up again on the back of fresh concerns about oil supplies in the wake of the threats posed by a powerful hurricane in the Gulf of Mexico and renewed violence in Iraq.

Based on a survey of 298 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.

But the ZEW insisted that expectations remain above an historical average of 34.8 points and as a result indicating that the moderate medium-term recovery of the economy is likely to continue with those responding to the September survey less pessimistic about current business conditions than they were last month.

The ZEW indicator of the current economic situation rose from - 65.2 points to -61.5 points with a rise in German industrial production helping to underpin analysts' assessment about the present business climate.

But faced with evidence that global economic growth might be cooling down, the analysts' economic expectations for the 12-member eurozone continued to worsen in September with the expectations' component falling 7.3 points to 44.7 points.

That said, however, the analysts' assessment of the current economic situation increased further rising by 6.2 points to -27.3 points in September.

DPA

Subject: German news
 

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