German Economic Sentiment Strengthens In October

German economic confidence strengthened for the first time four months in October as financial market experts expect more interest rate cuts amid slowing inflation, survey results from the think tank ZEW showed Tuesday.

The ZEW Indicator of Economic Sentiment rose notably to 13.1 from 3.6 in September. The score was above the expected level of 10.2.

On the other hand, assessment of current situation continued to worsen in October.
The corresponding index slid 2.4 points to -86.9, suggesting that nine out of ten respondents gave negative view. Moreover, the reading was weaker than economists’ forecast of -84.5.

Factors that supported an improvement in economic assessment was the expectation of stable inflation rates and the associated prospect of further interest rate cuts by the European Central Bank, ZEW President Achim Wambach said.

There were also positive signals from export markets. In addition, economic expectations for the euro area, the USA and China also significantly improved, said Wambach. The increased optimism for China is likely linked to the Chinese government’s economic stimulus measures, Wambach noted.

The survey showed an improvement in economic assessment about the Eurozone. At 20.1, the economic sentiment index moved up more-than-expected from 9.3 in September. The reading was seen at 16.9.

Meanwhile, the current conditions indicator fell 0.4 points to -40.8 in October.

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