Macro October 07, 2019 / 11:42 am UTC

Preview: Due October 15 - Eurozone/Germany ZEW Survey

By Giacomo Pallaro

We expect the ZEW economic sentiment index to correct lower in October to -25.0 after the index fell sharply in August to -44.1 before rebounding to -22.5 in September. Recent weak survey data are driving lower expectations regarding future German economic activity, with this data showing that the recession in manufacturing is starting to impact services. Notably, the Federation of German Industries recently asked the German government to abandon the Schwarze Null budget rule and support the economy, which highlights the fact that the manufacturing recessions shows no signs of abating.


With financial markets likely to judge current economic conditions as having deteriorated further, we expect the ZEW current conditions index to slip lower to -22.5 from -19.9 in September. However, there is a chance that the index falls further and matches the level of the economic sentiment index. Notably, the ZEW current conditions index has been above the ZEW economic sentiment index since March 2015, but with the difference between the two indices having narrowed materially during 2019 as economic conditions have worsened.

The ZEW economic expectations index for the Eurozone (EZ) will likely worsen in October after the strong rebound in September to -22.4 (up from -43.6 in August). We expect a small decline to -25.0 in October, as the WTO ruling on EU state aid to Airbus is fueling more pessimism—the ruling allows the U.S. to impose tariffs on EU goods worth €7.5 billion. The assessment of the EZ current economic conditions will likely remain relatively unchanged from the September level of -15.6.

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I, Giacomo Pallaro, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.