German investor morale points to continued recovery despite drop

Business

Investor sentiment in Germany fell by much more than expected in July but remained at a very high level, while expectations for a strong economic recovery rose, a survey showed on Tuesday.

The ZEW economic research institute said its survey of sentiment among investors fell to 63.3 points from 79.8 in the previous month.

But a separate ZEW gauge of current conditions surged to 21.9 from -9.1 points in June, moving into positive territory for the first time in two years and easily beating a consensus forecast for 5.0 points.

“The economic development continues to normalise,” ZEW President Achim Wambach said in a statement. “In the meantime, the situation indicator for Germany has clearly overcome the coronavirus-related decline.”

He added: “The financial market experts therefore expect the overall economic situation to be extraordinarily positive in the coming six months.”

Separate data on Tuesday from the Federal Statistics Office showed that orders for German-made goods posted their sharpest slump in May since the first lockdown in 2020.

That reflected weaker demand from countries outside the euro zone and fewer contracts for machinery and intermediate goods.

Orders for industrial goods fell 3.7% on the month in seasonally adjusted terms — the first drop in new business this year.

Carsten Brzeski of ING said the decline largely reflected supply chain disruptions, delivery delays and lack of materials and intermediate goods.

“Today’s disappointing industrial orders are no reason to be concerned,” he wrote in a note. “Order books are more than richly filled and reducing backlogs is a bigger problem for German companies than acquiring new orders.”