uploads///Germany ZEW Economic Sentiment Index in August

Why Did the Germany ZEW Economic Sentiment Fall?

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Nov. 20 2020, Updated 3:48 p.m. ET

Germany ZEW Economic Sentiment Index

According to data provided by the Centre for European Economic Research (ZEW), the Germany ZEW Economic Sentiment Index is at ten in August 2017—compared to 17.5 in July 2017. It didn’t meet the market’s expectation of 15.0.

The Economic Sentiment Index measures economists’ confidence level. The index has been strong in the past year. However, it has been falling gradually since June 2017. The gradual fall in the Economic Sentiment Index signals that consumer activity weakened in the economy.

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Economic impact

The Economic Sentiment Index fell in August due to weaker exports and the increasing scandal in Germany’s automobile sector. The euro (FXE) has strengthened against the US dollar (UUP) (USDU) in the past few months. The stronger currency impacted the performance of the country’s exports.

Germany (EWG) is the Eurozone’s (VGK) (IEV) (EZU) powerhouse. Auto manufacturing and exports account for a major portion of Germany’s GDP. Since the scandal is increasing in the automobile sector, the economy’s outlook is deepening gradually.

The iShares MSCI Germany (EWG), which tracks Germany’s performance, has fallen nearly 0.6% in August 2017. The iShares MSCI Germany Small Cap (EWGS), which tracks the performances of small-cap stocks in Germany, has risen nearly 0.9% in August.

In the next part of this series, we’ll analyze the indicators that investors should watch next week.

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