German economic sentiment has jumped up just in time for the German election, according to the latest ZEW survey numbers.
Expected to pick up from 42 to 46, we've seen a jump to 49.6 in economic sentiment in September.
Assessment of the current situation also markedly improved, analysts forecasting an uptick from 18.3 to 20.8. Instead, a surge to 30.6.
The wider Eurozone picture was also greatly improved, with economic sentiment beating estimates of a rise from 44 to 47.2, hitting 58.6.
Christian Schulz, senior economist, Berenberg:
The ZEW index expectations component is volatile and usually better at predicting turning points in the economic trajectory than the extent of the subsequent swing. The last major turning point was in autumn 2012, after the ECB finally provided a safety net for bond markets. Since then, its accommodative monetary policy has gradually started to reach the real economy again. In the first half of this year, political wobbles in some Eurozone crisis countries, but also China’s managed soft landing and the QE tapering discussions in the US temporarily weighed on sentiment.
However, the Eurozone’s long recession officially ended in Q2 and unemployment is showing signs of stabilisation, boosting confidence that the Eurozone has passed the economic trough for good. Downside tail risks remain, with the decision on the ECB rescue shield by Germany’s constitutional court topping the list. But with the economy back to growth, chances that the Eurozone can overcome potential setbacks improve, too.