Troubled euro zone weighs on German investor morale

MANNHEIM, Germany Tue Jul 16, 2013 4:20pm IST

File picture shows European Union member states' flags flying in front of the building of the European Parliament in Strasbourg, April 21, 2004. REUTERS/Vincent Kessler/File

File picture shows European Union member states' flags flying in front of the building of the European Parliament in Strasbourg, April 21, 2004.

Credit: Reuters/Vincent Kessler/File

MANNHEIM, Germany (Reuters) - German analyst and investor sentiment unexpectedly worsened in July, reflecting economic tensions in the euro zone and a global slowdown that is hitting exports, a survey showed on Tuesday.

The Mannheim-based ZEW economic think tank's monthly poll of economic sentiment fell to 36.3 from 38.5 in June, well below the consensus forecast in a Reuters poll of analysts for a rise to 39.6.

The reading sent the euro lower against the dollar and safe-haven Bund futures to a session high.

"The ZEW index turned out surprisingly bad. That is not a good sign for the euro zone and shows that not everything in Germany is as rosy as people think," said Sebastian Sachs at Metzler Bank.

Economists said a slowdown in China was particularly worrying for Germany's traditionally export-driven economy, which until recently has managed to offset weaker demand in Europe, struggling with its debt crisis, with stronger sales in emerging markets.

A bastion of strength in the early years of the euro zone crisis, the German economy shrank in late 2012 and had a subdued start to 2013, narrowly avoiding a recession. The recent picture has been mixed.

Exports fell the most since late 2009 in May, hit by weaker demand in Europe and now in China, too. Industrial orders and output tumbled.

Bosch ROBG.UL said on Tuesday it had cut the working hours of about 1,800 employees in Germany in response to weak demand for industrial and building technology.

But non-industrial data has been fairly positive, with sentiment surveys improving, the private sector expanding, joblessness falling and retail sales rising.

Germany's economy is still outperforming peers within the euro zone. In France, the bloc's number two economy, the quarterly jobless rate is at a 14-year high and a Reuters poll predicted GDP would contract 0.3 percent this year.

A separate gauge of current conditions in the ZEW survey rose to 10.6 from 8.6 in June, beating the consensus forecast of 9.0. Economists said this pointed to fundamental optimism about the economy.

"The positive picture of the German economy remains as the expectations components level is still high," said Ulrich Wortberg at Helaba.

The index was based on a survey of 265 analysts and investors and conducted between July 1 and July 15, ZEW said.

(Writing by Sarah Marsh; Editing by John Stonestreet)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Block Allocation

Coal Block Allocation

Government urges Supreme Court to not cancel some 'illegal' coal mines  Full Article 

Modi in Japan

Modi in Japan

Japan and India agree to boost strategic ties at summit  Full Article 

Basel III Norms

Basel III Norms

RBI amends Basel III guidelines for banks  Full Article 

HSBC PMI

HSBC PMI

Factory activity expands at slower clip in August.  Full Article 

Current Account

Current Account

Balance of payments surplus for third straight quarter  Full Article 

India Infrastructure

India Infrastructure

RBI rule handicaps India's infrastructure hopes  Full Article 

Book Talk

Book Talk

Reema Abbasi and a glimpse of Pakistan’s Hindu past  Full Article 

China Economy

China Economy

Retreat in China's PMIs heightens calls for policy easing.  Full Article 

Managing Share Sales

Managing Share Sales

Govt seeks bids from banks to manage PFC, REC share sales   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage