Germany’s Economic Confidence Steady as Policy Concerns Continue
Germany’s economic confidence stayed mostly unchanged in November. The ZEW index, which measures expert sentiment, was 38.5. While private spending improved, doubts about government policies and weaknesses in some industries remain.
Financial experts are cautiously optimistic about Germany’s medium-term outlook, but concerns about policy effectiveness and struggles in certain sectors are holding back stronger confidence.
The ZEW Indicator of Economic Sentiment fell slightly to 38.5 in November from 39.3 in October, showing that optimism is leveling off. Meanwhile, the assessment of current economic conditions rose slightly by 1.3 points to -78.7, showing only minor improvements in the real economy.
“Even though investment programs may help the economy, structural problems still exist,” said ZEW President Professor Achim Wambach. He added that confidence in Germany’s economic policies to solve major issues has declined.
Private Spending Rises, Industry Struggles
Looking closer, different sectors show contrasting trends. Private spending increased sharply, rising 13.3 points, which is a positive sign ahead of the holiday shopping season. Services like telecoms, IT, and electrical engineering also performed well.
In contrast, traditional manufacturing sectors struggled. Expectations for the chemical and metal industries dropped further into negative territory. The banking and insurance sectors also reported lower confidence compared to last month.
Eurozone Outlook Stable, ECB Policy Steady
Sentiment in the eurozone improved slightly, rising to 25.0 points from 22.7 in October. The current conditions index also improved by 4.5 points to -27.3, suggesting slightly better performance across the region.
Inflation expectations fell, with the sub-index dropping 4.4 points to -2.7. Analysts now see prices likely to rise more slowly, ahead of the European Central Bank’s December review.
ECB Executive Board Member Frank Elderson told Spanish newspaper Expansión that the bank’s monetary policy is “in a good place.” He emphasized a flexible approach, saying decisions will depend on incoming data. Elderson expects inflation to stabilize around 2%, but warned of risks from global trade issues and currency changes.
Elderson said that lower inflation has some risks, like a stronger euro, which could make euro area exports less popular, and more products being sent to Europe instead of the United States.
Markets stay strong as US shutdown nears end
European stocks kept rising on Tuesday, continuing gains from Monday, as hopes of the US government shutdown ending improved global investor confidence.
The STOXX 50 rose 0.5%, and the wider STOXX 600 went up 0.6%, helped by gains in luxury and banking stocks.
France’s LVMH jumped 2.4% after reports it plans to open more stores in China. BNP Paribas and Société Générale rose 2.3% and 4.1%, respectively.
Germany’s DAX index stayed around 24,000 points, with mixed performance across sectors keeping overall gains limited.
HeidelbergCement, Airbus, and Daimler Truck led the increases, up 3.3%, 1.4%, and 1.3%, while Rheinmetall, Continental, and Fresenius Medical Care were among the losers.
The euro stayed steady at $1.1570, and German 10-year bond yields remained at 2.67%.
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