German analyst and investor sentiment jumped more than expected in September thanks to the improved outlook for the euro zone, a new survey showed today.
A monthly poll of economic sentiment rose to 49.6 from 42 in August, ZEW economic think tank said, reaching the highest level since April 2010 and surpassing the consensus forecast in a Reuters poll for a rise to 46.
Analysts cautioned that the sentiment index could prove volatile and the economy still faced significant headwinds as evidenced by recent disappointing economic data.
But they said that the index was a clear sign that the German economy is benefiting from the stabilisation of the euro zone. The euro zone emerged from a one and a half year-long recession in the second quarter, with growth of 0.3%.
Germany, Europe's largest economy, has led the bloc's recovery so far, posting bumper 0.7% growth in the second quarter, bouncing back from a winter spell of weakness.
"This (German growth) was one of the main reasons of this continuing increase in expectations for Germany," said ZEW economist Michael Schroeder. "Another reason is the better outlook for the whole of Europe, which stimulates exports."
Schroeder said expectations for expansion in German domestic demand had risen but not as much as expectations for growth in the export-oriented sector, thanks to the surprise news that the euro zone was out of recession.
German data has been mostly positive of late, in particular forward-looking sentiment surveys, yet industrial and trade data for July were downbeat.
The index was based on a survey of 260 analysts and investors conducted between September 2 and September 16, ZEW said.