Investing.com – German economic sentiment improved significantly more-than-expected in January, rising to the highest level since July 2011, data showed on Tuesday.
In a report, the ZEW Centre for Economic Research said that its index of German economic sentiment improved by 32.2 points to minus 21.6 in January, compared to December’s reading of 53.8.
Analysts had expected the index to improve by 4.6 points to minus 49.2 in January.
On the index, a level above 0.0 indicates optimism, a level below 0.0 indicates pessimism.
This month’s increase suggests that within the next six months German economic activity is likely to stabilize instead of deteriorating further.
Meanwhile, economic sentiment in the euro zone rose by 21.6 points in January to minus 32.5 from minus 54.1 in December. Economists had expected euro zone economic sentiment to improve by 5.4 points to minus 48.7.
Improved economic data from the U.S. as well as the recent decline in yields from Spanish and Italian government bonds may have contributed to the indicator’s increase.
Commenting on the report, ZEW President Wolfgang Franz said, “The generous supply of liquidity by the ECB and the relatively affordable refinancing terms for Italy and Spain may have supported the improvement of this month’s sentiment.’
“Nonetheless, the further development of the debt crisis remains a risk to economic growth," Mr. Franz added.
Following the release of the data, the euro remained higher against the U.S. dollar, with EUR/USD gaining 0.96% to trade at 1.2789.
Meanwhile, European stock markets added to strong gains. The EURO STOXX 50 rallied 2%, France’s CAC 40 jumped 1.85%, Germany's DAX surged 1.85%, while the FTSE 100 rose 1.1%.
In a report, the ZEW Centre for Economic Research said that its index of German economic sentiment improved by 32.2 points to minus 21.6 in January, compared to December’s reading of 53.8.
Analysts had expected the index to improve by 4.6 points to minus 49.2 in January.
On the index, a level above 0.0 indicates optimism, a level below 0.0 indicates pessimism.
This month’s increase suggests that within the next six months German economic activity is likely to stabilize instead of deteriorating further.
Meanwhile, economic sentiment in the euro zone rose by 21.6 points in January to minus 32.5 from minus 54.1 in December. Economists had expected euro zone economic sentiment to improve by 5.4 points to minus 48.7.
Improved economic data from the U.S. as well as the recent decline in yields from Spanish and Italian government bonds may have contributed to the indicator’s increase.
Commenting on the report, ZEW President Wolfgang Franz said, “The generous supply of liquidity by the ECB and the relatively affordable refinancing terms for Italy and Spain may have supported the improvement of this month’s sentiment.’
“Nonetheless, the further development of the debt crisis remains a risk to economic growth," Mr. Franz added.
Following the release of the data, the euro remained higher against the U.S. dollar, with EUR/USD gaining 0.96% to trade at 1.2789.
Meanwhile, European stock markets added to strong gains. The EURO STOXX 50 rallied 2%, France’s CAC 40 jumped 1.85%, Germany's DAX surged 1.85%, while the FTSE 100 rose 1.1%.