June 13, 2017 / 10:50 AM / a month ago

UPDATE 1-German investor morale unexpectedly falls in June

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(Releads with expectations, adds analysts, background)

BERLIN, June 13 (Reuters) - German investor morale fell unexpectedly in June, the monthly ZEW survey showed on Tuesday, although signs of healthier growth across the European Union were seen as underpinning the outlook for Germany, Europe's biggest economy.

The Mannheim-based ZEW research institute said its economic sentiment index fell to 18.6 from 20.6 in May. The Reuters consensus forecast was for a rise to 21.5.

A separate gauge measuring investors' assessment of the economy's current conditions rose to 88.0 from 83.9 last month, reaching the highest level since July 2011. This compared with the Reuters consensus forecast of 85.0.

"The prospects for the German economy remain favourable. This is not least due to the positive gross domestic product growth in the European Union in the first quarter of 2017," said ZEW President Achim Wambach in a statement.

The German economy ministry said in its monthly report on Tuesday that an upturn in Germany was continuing during the second quarter, helped by noticeable rises in private and state spending and by an increase in industrial activity.

It added that a slight revival of the global economy was supporting German exports, which in April rose more strongly than expected. Coupled with a rise in industrial production in the same month, that fuelled hopes that the German economy can continue a recovery that started nine years ago.

"In the slightly revived global environment, German exports remain pointing upwards," said the ministry, adding it also saw a continuation of the trend of a falling current account surplus, in evidence since mid-2016.

The closely watched Ifo business morale index, which hit an all-time high in May and will next be published on June 26, will provide another snapshot of the health of the German economy.

"The fact that the ZEW index remains in positive territory means that the majority of investors still see economic conditions improving in the next six months," said Jennifer McKeown of Capital Economics.

"The message is a broadly encouraging one," she added. (Reporting by Joseph Nasr; Editing by Madeline Chambers and Catherine Evans)

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