- David Milleker, chief economist at Union Investment GmbH
Confidence among German investors increased for a second consecutive month in June, amid signs that a recovery in Europe's powerhouse remains on track for a stronger growth in the second quarter after the weak performance during the first three months. According to data from the Ifo Institute for Economic Research, a gauge of business climate, based on a survey of 7,000 executives, jumped to 105.9 this month compared with 105.7 in May, meeting analysts' expectations. Moreover a measure of executives' expectations soared to 102.5 up from 101.6; however, an index of current business conditions dropped to 109.4 from 110.
Germany, Europe's largest economy, recorded a sluggish growth of 0.1% in the first quarter of this year, after contracting 0.7% at the end of the last year. The stable improvement in investor confidence, the biggest monthly jump in more than a year in industrial production, and the fact that the Bundesbank expects a significant acceleration in Q2 are adding to signs that worse is over and the economy will start to recover soon. However, there are still risks of a slowdown down the road. Later this month the ZEW Center for European Economic Research said that its index of investor and analysts expectations improved as well and reached 38.5 in June from 36.4 in May.
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