Germany’s ZEW economic sentiment
Germany (EWG) is one of the leading economies in the Eurozone (IEV) (VGK) (HEDJ). Manufacturing plays an important role in Germany’s economy. The economy has posted continuous improvement in its manufacturing PMI, services PMI, and business climate index since August 2016.
Germany’s ZEW Economic Sentiment Index also posted a strong improvement in May 2017. The index stood at 20.6 in May as compared to 19.5 in April. However, it didn’t meet the market expectations of 22. The May figure was the highest figure since August 2016.
After the Brexit decision on June 23, 2016, the ZEW Economic Sentiment Index and the Ifo Business Climate Index showed a huge fall in July 2016. However, the indexes recovered in the next month. The ZEW Economic Sentiment Index measures the optimism that institutional investors and analysts have regarding Germany’s current economic situation.
Germany’s export business is improving on the back of business orders and new orders. As the country hugely depends on exports, the improvement in this component is a good sign for the economy.
Performance of ETFs
The iShares MSCI Germany ETF (EWG), which tracks the performance of Germany, rose nearly 3.8% in May. The iShares MSCI Germany Small Cap (EWGS), which tracks the performance of small-cap stocks in Germany, rose nearly 8% in May 2017. Germany’s DAX (DAX-INDEX) rose nearly 0.8% in the same month.
In the next part of this series, we’ll analyze the performance of the Eurozone ZEW Economic Sentiment Index in May 2017.