German ZEW Investor Confidence Improves More Than Expected

Investor sentiment in Germany grew for a tenth month and at a faster than expected pace in May to its highest level in over two years, on hopes of an interest rate cut by the European Central Bank in June and an increase in export demand from China, results of a survey revealed Tuesday.

The ZEW Indicator of Economic Sentiment for Germany climbed to 47.1 from 42.9 in April. Economists had forecast a score of 44.9.

The index has steadily risen since August last year, when the reading was -12.3. The latest score was the highest since February 2022.

The indicator reflecting the assessment of the current economic situation in Germany climbed to – 72.3 from -79.2. Economists had expected a reading of -75.0 for May. The latest reading was the strongest since August last year.

ZEW President Achim Wambach attributed the sustained improvement in German investor confidence to the stronger-than-expected economic growth in the first quarter.

The German economy avoided a recession in the first quarter on exports and investment in construction and the gross domestic product grew a more-than-expected 0.2 percent sequentially.

“Signs of an economic recovery are growing, bolstered by better assessments of the overall eurozone and of China as a key export market,” Wambach said.

“The increased optimism is reflected in particular in the sharp rise in expectations for domestic consumption, followed by the construction and machinery sectors.”

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