Morale among German investors darkened more than expected in August, registering the strongest decline in two years, on increasing concerns over the health of the global economy.
The ZEW Indicator of Economic Sentiment declined sharply by 22.6 points to 19.2 from 41.8 in July. The last time expectations experienced such a nosedive was July 2022. August’s decline was the second consecutive fall and came in sharply below economists’ forecast of 30.6.
The assessment of the current economic situation also worsened in August. Deteriorating economic hopes for the eurozone, US and China meant the sentiment for export-intensive sectors – a key driver of Germany’s economy – declined, ZEW president Achim Wambach said.
Meanwhile, consumer price inflation in Britain increased for the first time in seven months in July, a report by the Office for National Statistics showed on Wednesday.
Inflation rose by 2.2 per cent, less than expected, as underlying price pressures weakened sharply, opening the door to more interest rate cuts by the Bank of England this year. Inflation was up from two per cent in June but below the rise to 2.3 per cent predicted by economists.
Core inflation, which excludes volatile categories such as food, energy, alcohol and tobacco prices, rose by 3.3 per cent in the year to July, down from 3.5 per cent in the year to June.
Inflation in the services sector, which is closely watched by monetary policymakers at the Bank of England, fell to 5.2 per cent in July from 5.7 per cent in June.
Finally, the eurozone economy registered a steady pace as initially estimated in the second quarter of this year, data published by Europe’s statistics office Eurostat showed on Wednesday.
Gross Domestic Product (GDP) grew by 0.3 per cent during the second quarter compared to the first, according to the report. Year-on-year, economic growth improved to 0.6 per cent from 0.5 per cent in the first quarter. The second quarter sequential and annual GDP growth rates were both in line with economists’ estimates.
The European Union as a whole also registered a steady quarterly expansion of 0.3 per cent in the second quarter. Year-on-year, growth accelerated to 0.8 per cent from 0.6 per cent.
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