Optimism Increases Among German Investors and Analysts

Optimists regarding the outlook for the next six months among German financial market professionals outweighed pessimists by 44.8% in June according to the latest ZEW Survey (The Mannheim based Center for European Economic Research). This represented an increase of 13.7 percentage points from May and was the largest margin of optimists since June 2006. It was also well above the long term average of 26.3%. The financial professionals also saw some slight improvement in current conditions. The percent balance between pessimists and optimists declined from 92.9%in May to 89.7% in June. The first chart shows the ZEW appraisals of current conditions and expectation for the next six months.

A part of the group's more optimistic appraisal of the outlook can be attributed to their expectations of profit increases in both the banking and insurance industries, as shown in the second chart. Expectations of profits in the banking industry have risen from 2.0% in April to 30.8% in June, and in the insurance industry from 5.1% in May to 9.7% in June. Except for a 5.4% increase in Utilities' profits and virtually no change in Information Technology profits, expectations for all the other industry are still negative, although less so.