German Investor Confidence Climbs To 3-year High In September

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German investor confidence rose less than expected in September, but reached its highest level in more than three years, a closely watched survey revealed Tuesday.

The economic sentiment indicator rose to 57.7 points in September, the highest reading since April 2006, from 56.1 points in August, the Centre for European Economic Research or ZEW said. Economists had forecast a reading of 60 for the month. The current figure stood well above the indicator's historical average of 26.6 points. The current development of the indicator shows that the financial experts' positive economic expectations have further stabilized, the Mannheim-based ZEW said.

"The economic expectations for Germany are consistent with the picture that the German economy is recovering, but at a slow pace," ZEW President Wolfgang Franz said. With regard to the national debt, additional government stimulus packages are not appropriate, he noted.

The think-tank said the economic outlook for Germany mainly depends on the recovery of the world economy and better prospects for German exporters.

A day earlier, the European Commission forecast showed that German economy would expand 0.7% in the third quarter after it exited the recession in the second quarter by growing 0.3%. In the fourth quarter, growth in the biggest Eurozone economy is predicted to ease to 0.1%. The Commission upwardly revised its full year forecast for Germany to show an economic contraction of 5.1% versus the 5.4% decline forecast earlier.

Furthermore, the financial experts are more optimistic about private consumption, although the prospects for the next six months are burdened by the end of the auto wrecking bonus and by an anticipated rise of unemployment.

On September 2, Germany ended its EUR 5 billion car scrappage scheme, which was implemented to assist the country's crisis-hit automobile industry. As a result of the scheme, car sales rose for the seventh consecutive month in August.

The assessment of the current economic situation in Germany improved in September. The corresponding indicator rose by 3.2 points to minus 74 points.

"We expect the indicator to improve significantly again in the coming months and the assessment of the current situation should also be much more positive soon," Commerzbank analyst Ralph Solveen said.

Moreover, ZEW said the economic expectations for the Eurozone rose by 4.7 points to 59.6 points in September. The indicator for the current economic situation in the region improved by 4.2 points to minus 77.9 points.

German investor confidence rose less than expected in September, but reached its highest level in more than three years, a closely watched survey revealed Tuesday. (Market News Provided by RTTNews)