German Economic Sentiment Improves 'Significantly' as Election Draws Near - ZEW

Economic sentiment advanced in Germany this month helped by an increase in bank lending, rising investment activities and stable global economic development with market experts appearing to be unfazed by the country's upcoming election, fresh survey data has shown.

The closely-watched ZEW Indicator of Economic Sentiment for Germany, based on the opinions of 203 analysts polled by the Mannheim-based Centre for European Economic Research, climbed by 7 points in September when compared to the previous month, producing a reading of 17.0 points.

A sub-index providing analysts' assessments of the economic development of the Eurozone also improved, with the respective indicator increasing by 2.4 points to a reading of 31.7 points. Broken down by industry sectors, the balance of readings measuring sentiment for the retail and consumer goods, construction, mechanical engineering, IT and chemical and pharmaceutical sectors were among those which ranked highest.

"The solid growth figures in the second quarter of 2017 in combination with a steep rise in bank lending and increasing investment activities by both the government and private firms are likely reasons for the financial market experts' significantly more positive outlook compared to that of last month," Achim Wambach, president of ZEW said.

"Their expectations are further corroborated by stable global economic development. The German federal elections do not seem to have been a source of uncertainty. The worries about the recent strengthening of the euro has, for now, also faded into the background," he added.

Germany's federal elections are due to be held on Sunday with incumbent Chancellor Angela Merkel seeking a fourth consecutive term. The leader of Germany's Christian Democratic Union (CDU) party became chancellor in 2005 and, according to a recent opinion poll, is seen to have a sizable lead over other parties.

Merkel's Christian Democratic Union (CDU)-Christian Social Union ( CSU ) coalition was ahead with 36% of the prospective vote, followed by rival SPD party, which had 22% of the prospective vote, according to Bild am Sonntag, a German newspaper which was displaying its latest voter poll on its website on Tuesday. The poll was conducted among 2,042 participants in the period from Friday September 15 through Monday 18th.

Germany has the largest economy in Europe and one of the lowest unemployment rates in the region. Merkel, and her coalition government have also played influential roles shaping policies within the Eurozone as well as in global initiatives such as efforts to promote clean energy and combat climate change.

Retail sales in Germany rose for a ninth consecutive month in August while construction activity showed strong growth, helped by a record rise in new business the same month, survey data published by economic research company IHS Markit showed earlier this month. The purchasing managers' index output for Germany has also consistently expanded since 2013, according to separate data from IHS Markit.

In 2016, Germany's unemployment rate was second only to the Czech Republic, whose population is around an eighth of the size of Germany's, with only 4.1% of the working age population out of work, down from 4.6% in 2015, 5% in 2014 and 5.2% in 2013, according to Eurostat, the statistical office of the European Union. Gross domestic product has expanded every year in Germany since 2013, with the economy growing by 1.9% last year, up from 1.7% in 2015 and 1.6% in 2014.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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