ZEW: economic sentiment in Germany deteriorated significantly in August

The ZEW economic sentiment index for Germany, which looks ahead six months, fell to 34.7 points from 52.7 points in July, a decline greater than the expected 39.5 points.

The index returned to positive territory in November last year after fluctuating in the negative range for six months, then fell back into negative territory in April due to uncertainty surrounding the United States’ trade policy measures, but has been in positive territory again since May.

The assessment of the German economic actors included in the survey about the current conditions of the economic environment also deteriorated, with the August index falling to minus 68.6 points from minus 59.5 points in July. Experts had expected a less deteriorating index of minus 65.0 points.

ZEW notes that experts are disappointed by the trade agreement between the United States and the EU, with the outlook for the chemical and pharmaceutical industries in particular deteriorating, but the mechanical and metal industries and the automotive industry also being hit hard.

The ZEW economic sentiment indicator for the eurozone, which looks ahead six months, weakened from +36.1 points in July to +25.1 points, compared with the average analyst expectation of +28.1 points.

The Mannheim-based ZEW economic research institute has been conducting its survey monthly since 1991. Financial analysts from around 350 banks, insurance companies and large industrial companies surveyed can give their assessments in a range of minus 100 to plus 100 points.