German Investor Confidence Surges as Economic Momentum Picks Up

  • Expectations index rose to 16.6 in January from 13.8
  • ZEW says German economic situation has improved significantly

German investor confidence improved in January as strong data at the end of 2016 bolstered the outlook for Europe’s largest economy.

The ZEW Center for European Economic Research in Mannheim said on Tuesday that its index of investor and analyst expectations, which aims to predict economic developments six months ahead, rose to 16.6 from 13.8 the previous month. Economists in a Bloomberg survey predicted an increase to 18.4.

The German economy gained momentum in the fourth quarter, with the pace of expansion doubling to about half a percent, while unemployment continued to decline. Stronger growth bodes well for the country as it heads toward elections in the fall and negotiations between the U.K. and the European Union on their post-Brexit relationship get under way.

“The slight increase” in sentiment “is mainly due to the improved economic situation across European countries,” ZEW President Achim Wambach said in a statement. “This improvement in expectations can thus also be seen as a leap of faith for 2017.”

ZEW’s gauge for current conditions rose to 77.3 in January from 63.5. A measure for expectations in the euro area advanced to 23.2 from 18.1.

A final reading for German inflation will be published on Wednesday and is forecast to show prices increased the most since mid-2013. The European Central Bank is unlikely to make any changes to its stimulus measures when policy makers meet on Thursday, according to a majority of economists surveyed by Bloomberg.

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