Investor confidence goes up in Germany

Bloomberg

The ZEW Center for European Economic Research in Mannheim yesterday said its index of investor and analyst expectations rose to minus 3.5 from minus 5.8 in February. Economists expected a drop to minus 8, the median of 39 forecasts in a Bloomberg News survey showed.

The ECB on March 5 lowered its key rate by 50 basis points to 1.5 percent to stem the worst economic slump in 60 years. In Germany, Chancellor Angela Merkel’s coalition has agreed to spend about 80 billion euros ($104 billion) to stimulate economic growth. Germany’s benchmark DAX share index has gained 8 percent this month, reducing its decline this year to 17 percent.

"Confidence will probably recover further in coming months," said Simon Junker, an economist at Commerzbank in Frankfurt. "The situation can’t get much worse. We expect an economic stabilization in the second half."

ZEW’s gauge of current conditions fell to minus 89.4 from minus 86.2 in February, the survey of economists shows.There are signs Germany’s recession is deepening. Industrial output dropped 7.5 percent in January from December, the biggest decline since data for a reunified Germany began in 1991, and factory orders plunged 38 percent from a year earlier as export demand slumped. Unemployment rose in February for a fourth straight month, pushing the jobless rate to 7.9 percent, while business confidence dropped to a 26-year low.