Key facts
- German investor morale increased to 34.2 points in August, surpassing expectations.
- The ZEW economic research institute reported the improved sentiment.
- Positive quarterly results and export orders contributed to the rise.
- Concerns about high energy prices and transport disruptions were partially offset.
- The assessment of the current economic situation also improved.
German investor morale saw a more significant improvement than anticipated in August, reaching 34.2 points, according to the ZEW economic research institute. Analysts had forecast a rise to 30.0 points from July's 26.3. The ZEW President, Achim Wambach, attributed the positive trend to strong quarterly results and robust export orders, which helped to mitigate the impact of elevated energy prices and logistical challenges.
Furthermore, the assessment of the current economic situation also improved, with the index rising to -61.1 points from -77.6 in July, exceeding expectations. The survey, conducted between August 10 and 17, included responses from 185 analysts and institutional investors.
Wambach noted that federal government spending on infrastructure provided a boost, though he cautioned that record low water levels on the Rhine River posed a risk to economic activity. Several industries, including chemical producers, utilities, steelmakers, and agricultural traders, have warned of increased costs and reduced production due to these low water levels.
Economist Ulrich Wortberg of Helaba Research viewed the ZEW figures as indicative of a continuing recovery in sentiment and suggested they support the likelihood of an interest rate hike by the European Central Bank. While higher oil and natural gas prices, influenced by the Iran war, have previously hampered recovery in Europe's largest economy, recent positive momentum has emerged. Overseas buyers have placed orders with German energy-intensive manufacturers, who have gained a competitive advantage as Asian rivals face even greater cost pressures linked to the Middle East conflict.