German economic confidence deteriorated for the fifth consecutive month to hit the lowest since March 2020 amid supply bottleneck and higher input prices, survey results from the ZEW – Leibniz Centre for European Economic Research showed on Tuesday.
The ZEW Indicator of Economic Sentiment dropped to 22.3 in October from 26.5 in September. The reading was below the economists’ forecast of 24.0 and was the lowest since March 2020, when the score was -49.5.
The indicator for the current economic situation declined 10.3 points to 21.6 in October. This was the first time that the indicator has recorded a decline after its continuous increase between February and September 2021.
The economic outlook for the German economy has dimmed noticeably,” ZEW President Achim Wambach, said. The further decline of the ZEW Indicator of Economic Sentiment is mainly due to the persisting supply bottlenecks for raw materials and intermediate products.
The financial market experts expect profits to go down, especially in export-oriented sectors such as vehicle manufacturing and chemicals/pharmaceuticals, Wambach noted.
The survey showed that financial market experts’ sentiment concerning the economic development of the eurozone also decreased for the fifth consecutive time. The economic sentiment index fell 10.1 points to 21.0 in October.
The indicator for the current economic situation slid 6.6 points to a level of 15.9 points compared to September.
According to ZEW, inflation expectations for the eurozone fell slightly. The inflation indicator came in at 17.1 points in October, which was 3.0 points lower than in the previous month. However, 49.1 per cent of the experts still expect the inflation rate to rise further in the next six months.