German economic confidence weakened unexpectedly to a 3-month low in June, but financial market experts' assessment about the current situation improved notably, a closely watched survey showed Tuesday.
The ZEW Indicator of Economic Sentiment dropped to 18.6 in June from 20.6 in May, according to survey data from the Mannheim-based Centre for European Economic Research/ZEW.
The indicator remained below the long-term average of 23.9 points and economists' forecast of 21.7.
On the other hand, the current conditions index rose more-than-expected to 88.0 from 83.9 a month ago. This was the highest level since July 2011. The expected reading was 85.4.
"The prospects for the German economy remain favorable," ZEW President Achim Wambach said.
"This is not least due to the positive GDP growth in the European Union in the first quarter of 2017."
Nearly 71 percent of the financial market experts expect the current situation to remain as favorable as it is at the moment, and 23.9 percent even expect it to improve in the coming six month, he added.
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, Jennifer McKeown, an economist at Capital Economics, said.
However, the economist said it is unclear whether this means that they expect growth to gain pace or simply to remain positive. But the message is a broadly encouraging one.
The finance ministry said the German economy continues its upturn in the second quarter. The ministry noted that both private as well as government spending picks up noticeably.
The economic confidence index for the euro area climbed 2.6 points to 37.7. Likewise, the current conditions index rose 2.2 points to 20.5.
Expectations regarding the inflation rate in the currency bloc declined slightly by 0.6 points to a new level of 16.4 points. The majority of financial market experts expects the inflation rate to remain on a moderate level.
by RTT Staff Writer
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