Investor sentiment in Germany rose sharply in December, spiking 23.4 points to 34.9 in December, according to an investor confidence index. It is the highest level since May 2014.
The Centre for European Economic Research (ZEW - Zentrum für Europäische Wirtschaftsforschung) in Mannheim is a nonprofit and independent institute. It was founded in 1990 on the basis of a public-private initiative in the federal state of Baden-Württemberg in co-operation with the University of Mannheim.
"Confidence in the German economy seems to be slowly returning among the financial market experts surveyed by ZEW. This increase is related to favourable economic conditions such as the weak euro and the low crude oil price. The recently published German export figures already show a positive trend. However, we should be aware that the current optimism is fuelled by factors that might change even over the short term," said Professor Clemens Fuest, ZEW president .
The assessment of the current situation in Germany is improving as well. Growing by 6.7 points, the index now stands at 10.0 points.
The financial market experts’ sentiment concerning the economic development of the Eurozone is also improving. The sentiment indicator for the Eurozone has increased by 20.8 points to a reading of 31.8 points. The indicator for the current situation in the euro area decreased in December by 3.1 points to a value of minus 62.8 points.
Deutsche Welle noted that some analysts were more wary of the rosy outlook in Europe's top economy, as they believe the ZEW index is volatile and, therefore, not especially reliable.
German recovery "will be steady rather than spectacular," requiring additional policy support in Germany and the Eurozone as a whole to boost growth, said Jennifer McKeown, senior European economist at Capital Economics in London.
She noted December's sharp rise in the ZEW index is an encouraging sign, but the spike is at odds with what she considers a more reliable indicator - the purchasing managers' index (PMI).
Germany's PMI disappointed investors on Tuesday, when it fell to 51.4 in December from a final reading of 51.7 in November.
230 analysts participated in the December-survey which was conducted during the period 12/1-12/15/2014. Analysts were asked about their expectations for the next 6 months.