Investor confidence in Germany declined in October for the first time since April, as high energy prices weakened expectations for a sustained recovery in Europe’s largest economy.
The ZEW Indicator of Economic Sentiment fell by 6.6 points to 28.1, down from 34.7 in September, ending five consecutive monthly increases. The reading was below the 30 points forecast by economists surveyed by Reuters.
ZEW President Achim Wambach said Germany was gradually emerging from stagnation, but its recovery was not yet self-sustaining. Elevated energy costs continued to reduce households’ purchasing power, raise companies’ production expenses and prolong inflation, holding back private consumption and investment.
Despite the weaker outlook, respondents became more positive about present economic conditions. ZEW’s current situation indicator rose by 11.2 points to minus 35.9, suggesting that conditions were improving even as confidence in the months ahead softened.
The contrast highlights the uneven nature of Germany’s recovery. Expectations weakened in banking, insurance, services and telecommunications, while steel, metal manufacturing and electronics showed more encouraging signals.
The October findings point to an economy making tentative progress while remaining vulnerable to energy costs and subdued domestic demand. Improving current conditions offer some reassurance, but the decline in expectations suggests investors remain cautious about whether that progress can be sustained.
