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Rise in German investor morale points to modest recovery
June 18, 2013 / 9:18 AM / 4 years ago

Rise in German investor morale points to modest recovery

MANNHEIM, Germany (Reuters) - German analyst and investor sentiment rose for a second straight month in June, a leading survey showed on Tuesday, suggesting Europe’s largest economy is on track for a modest recovery after a weak end to 2012 and sluggish start to this year.

File photo of shoppers resting with their purchases in downtown Hanover June 19, 2012. REUTERS/Fabian Bimmer/Files

The Mannheim-based ZEW economic think tank’s monthly poll of economic sentiment climbed to 38.5 from 36.4 in May, beating the consensus forecast in a Reuters poll for a reading of 38.1.

Economists said the survey suggested the German economy was regaining traction after it contracted in late 2012 and only narrowly escaped a recession at the start of 2013 with growth of just 0.1 percent.

“Recently, doubts about the strength of the German economy have emerged again,” said ING senior economist Carsten Brzeski.

“Of course, all good things come to an end at some point in time. For the time being, however, Germany’s economic growth seems to be like an old rock star: it can’t get enough of comebacks.”

Like investor sentiment, business morale has picked up in Germany and the private sector has expanded slightly. The latest data has shown industrial output and foreign trade improving, but orders slumping and unemployment edging up.

ZEW President Clemens Fuest said the German economy would pick up speed in the second half of the year, echoing the view of the Bundesbank and the German government. But he also said more than half of survey participants expected no significant economic impulses in the next six months.

“The results of the current survey indicate that the economy will improve rather slowly,” he said.

The Bundesbank also said on Monday it expected growth to slow over the summer.

    On Tuesday Germany’s RWI economic institute was the latest think tank to slash its growth forecasts, cutting its 2013 estimate to 0.4 percent from 0.6 percent in March and reducing its 2014 estimate to 1.9 percent from 2.1 percent.

    It said private consumption, which was the economy’s saving grace in the first quarter of this year, would be the main growth driver, helped by higher wages.

    Some German companies have been downbeat of late, with truck maker MAN (MANG.DE) warning its return on sales would shrink significantly this year, steel distributor Kloeckner & Co (KCOGn.DE) increasing planned job cuts and media conglomerate Bertelsmann’s BERT.UL broadcaster RTL (RRTL.DE) saying a tough European market would hamper profit.

    The ZEW index based on a survey of 257 analysts and investors was conducted between June 3 and June 17, ZEW said.

    A separate gauge of current conditions dipped to 8.6 from 8.9 last month, coming in below the mid-range estimate in a Reuters poll for 9.5.

    Writing by Michelle Martin in Berlin; Editing by Noah Barkin

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