Sentiment among stock market professionals on the rise - expert: a puzzle
There is a growing impression that the economy has bottomed out. The mood among stock market professionals continues to brighten.
For the fourth month in a row, stock market professionals are less pessimistic about the prospects for the German economy in November. "This confirms the impression that the economic development in Germany has bottomed out," commented ZEW President Achim Wambach. Chief economist Alexander Krüger from Hauck Aufhäuser Lampe Privatbank reacted rather skeptically to the data: "Where the sudden rise in expectations is coming from remains a mystery." Apparently, the view "that things can only get better in the future in view of the desolate situation" is gaining ground, said Krüger. "The ZEW survey reinforces the prospect of economic output stagnating at best for the time being."
The barometer for the assessment of the economy over the next six months rose by 10.9 points to plus 9.8 points and is thus back in positive territory for the first time since April, according to the Mannheim Center for European Economic Research (ZEW), which conducted its survey of 174 analysts and investors. Economists had only expected an increase to plus 5.0 points. At the same time, the assessment of the current situation stabilized: this barometer rose minimally by 0.1 points to minus 79.8 points.
More insolvencies
The German economy shrank by 0.1% in the summer and is likely to slip into a temporary - so-called technical - recession in the current quarter if economists expect the economy to weaken. The German government assumes that Europe's largest economy will regain its footing next year. Accordingly, growth rates of 1.3 and 1.5 percent are expected in 2024 and 2025.
However, the economy is currently not getting off the ground and is stagnating, according to the Ministry of Economic Affairs' monthly report. The environment has improved somewhat in view of significantly falling inflation rates, rising real incomes and a slightly brighter mood in the economy. However, the weak statistical starting position at the end of the third quarter is weighing on the start of the final quarter of 2023.
KfW: The economy has bottomed out
"The economic trend continues to resemble the famous ride on the razor's edge between slight growth and declining gross domestic product," said Chief Economist Thomas Gitzel from VP Bank. This is also reflected in the significant increase of 22.4 percent in regular insolvency applications in October compared to the previous year, according to preliminary calculations by the Federal Statistical Office. Nevertheless, the German Professional Association of Insolvency Administrators and Trustees (VID) is not expecting a wave of company bankruptcies.
In addition to the ZEW index, the business climate for small and medium-sized companies also improved in October after five consecutive declines. This was signaled by the KfW-IFO SME Barometer. KfW Chief Economist Fritzi Köhler-Geib also tried to paint the picture that "the economic trough has finally bottomed out".
The ZEW index for the eurozone showed a mixed picture: a decline in the situation and an increase in expectations. As in Germany, the economy in the eurozone shrank slightly by 0.1 percent in the summer compared to the previous quarter, according to the statistics office Eurostat, confirming an initial estimate from the end of October.
The improvement in the ZEW Index, indicating higher expectations for economic growth in Germany, is a positive sign. This increase, which brings the index back into positive territory for the first time since April, suggests that the German economy may have reached a turning point and is starting to recover.
Despite this improvement, the German economy is still predicted to stagnate at best in the near future, as noted by Hauck Aufhäuser Lampe Privatbank's chief economist Alexander Krüger. This suggests that while there is optimism about future economic growth, the current economic situation remains challenging.
Source: www.ntv.de
