Germany’s economic sentiment remained broadly unchanged in November, as financial experts continued to express cautious optimism about the country’s medium-term outlook. However, persistent doubts over economic policy effectiveness and sector-specific weakness tempered enthusiasm.
The ZEW Indicator of Economic Sentiment dipped slightly to 38.5 points in November from 39.3 in October, suggesting that optimism among experts is plateauing.
The assessment of current conditions rose marginally by 1.3 points to minus 78.7, reflecting little improvement in the real economy.
“Although the investment programme is likely to provide economic stimulus, the structural problems continue to exist,” said ZEW President Professor Achim Wambach.
“The overall mood is characterised by a fall in confidence in the capacity of Germany’s economic policy to tackle the pressing issues,” he added.
Private consumption rebounds, but industrial sectors falter
The headline figure masked notable divergences among sectors. Private consumption saw a marked upswing, with expectations surging 13.3 points—an encouraging sign ahead of the crucial holiday shopping season.
Service industries, including telecommunications, electrical engineering and IT, also reported positive momentum.
By contrast, sentiment deteriorated in traditional manufacturing sectors. Outlooks for the chemical and metal industries fell further into negative territory, while the banking and insurance sectors also reported lower expectations compared to the previous month.
Eurozone sentiment holds steady, ECB in ‘good place’
Expectations for the eurozone economy improved modestly, rising to 25.0 points from 22.7 in October.
The current conditions index also rose by 4.5 points to minus 27.3, indicating slightly better underlying economic performance across the bloc.
Inflation expectations for the eurozone declined, with the sub-index falling 4.4 points to minus 2.7—suggesting analysts increasingly see price pressures moderating. These developments come amid growing anticipation of the European Central Bank’s December projections.
In a recent interview with Spanish economic newspaper Expansión, ECB Executive Board Member Frank Elderson reaffirmed that the central bank’s monetary stance remains appropriate, while reiterating a data-dependent approach.
“Our monetary policy is in a good place. It’s true that the economic environment remains uncertain, so we cannot commit to a pre-determined interest rate path,” he said.
Elderson highlighted that inflation is expected to stabilise around the 2% target, but warned of both upside and downside risks—including global trade fragmentation and currency appreciation.
“Among the risks of lower inflation I would include the appreciation of the euro, which could reduce demand for euro area exports; and a re-routing to the euro area of products previously shipped to the United States,” Elderson said.
Markets resilient as US shutdown end looms
European equities continued to rise on Tuesday, extending gains from the previous session as hopes of a resolution to the US government shutdown supported global risk sentiment.
The STOXX 50 rose 0.5% and the broader STOXX 600 gained 0.6%, buoyed by strength in luxury and banking shares.
France’s LVMH jumped 2.4% on reports of further store expansion in China, while BNP Paribas and Société Générale gained 2.3% and 4.1% respectively.
Germany’s DAX index was flat at around 24,000 points, as mixed sector performance kept gains in check.
HeidelbergCement, Airbus and Daimler Truck led the advance, up 3.3%, 1.4% and 1.3%, respectively, while Rheinmetall, Continental and Fresenius Medical Care were among the day’s laggards.
The euro held steady at $1.1570, and German 10-year Bund yields remained unchanged at 2.67%.