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Economy in Brief

ZEW Expectations Make Gain
by Robert Brusca  April 19, 2016

The ZEW current index continues its slow erosion, but expectations rose to 11.2 in April from 4.3 in March. At 11.2, expectations are at the border of the bottom one-third of their historic queue of values. The slipping current index, at 47.7, stands at the border of its top 20 percentile. One year ago both were much stronger with the current index in the top 10% of its queue of values and expectations just outside the top 25%. Despite the rebound in expectations, expectations are remaining in a weaker setting that they had for most of 2015.

The ZEW financial experts provide profitability estimates for the various German stock sectors. Currently, they elevate consumption/trade and construction stocks to the higher level with each having a higher rating less than 5% of the time. Info-tech is well-regarded with an 85th percentile standing. However, banking insurance and utilities all have lower 20% expectations. Vehicles carry a 69th percentile standing, a reasonably firm assessment.

The consumer has been carrying the German economy and that continues to be the case. The ZEW financial experts remain guarded on the outlook with poor assessments for the financial sector and for insurance. Despite some pick up in expectations in the ZEW survey this month, the Bundesbank just warned of a slowing in its economic assessment yesterday. Germany continues to grow but not to impress.

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