German ZEW Investor Confidence Unchanged as Brexit Risks Persist

  • Expectations gauge held at 0.5 in September; estimated 2.5
  • ZEW cites ‘ambiguity’ in signals for economic prospects

German investor confidence was unchanged in September after recent data signaled economic momentum cooled.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months ahead, held at 0.5. Economists in a Bloomberg survey predicted an increase to 2.5.

While Germany is benefiting from record-low unemployment and borrowing costs, subdued global growth and the potential fallout from the U.K.’s decision to leave the European Union are weighing on its economic prospects. Business confidence slumped the most since 2012 in August and a gauge for private-sector activity fell to a 15-month low.

“The current ambiguity of economic impulses from Germany and abroad means that forecasts for the next few months are difficult,” ZEW President Achim Wambach said in the statement. “German exports, particularly to non-EU countries, as well as industrial production figures, have disappointed. By contrast, the economic environment in the European Union is improving.”

A gauge for current conditions dropped to 55.1 in September from 57.6. A measure for expectations in the euro area climbed to 5.4 from 4.6.

The European Central Bank last week downgraded its euro-area growth for 2017 and 2018, stating it remains ready to add stimulus if needed.

Despite cooling confidence, demand for German equities has bolstered the country’s benchmark stock index, which became the first among major euro-area counterparts this month to recover its losses for the year. A survey by Bank of America Corp. found that European fund managers are the most overweight on the country’s equities since February 2015, while a separate survey shows private investors are the most bullish on the market since at least July.

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