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German investor mood sours in July

BERLIN (AFP) – German investor confidence slipped in July, a key survey showed yesterday, adding to fears of a deeper downturn in Europe’s biggest economy.

After a slight rebound in June, the ZEW institute’s economic expectations index shed 6.2 points to reach minus 14.7 points.

The reading was worse than analysts had expected, with experts at financial data firm FactSet having pencilled in minus 10 points. A negative reading means most investors are pessimistic.

ZEW president Achim Wambach said in a statement the survey was “shifting even more noticeably into negative territory”.

“The industrial sectors are likely to bear the brunt of the anticipated economic downturn, with profit expectations for these export-oriented industries experiencing a substantial decline once again,” he said.

A man walks in the city centre of Frankfurt, Germany. PHOTO: AP

Europe’s top economy fell into a technical recession at the start of the year, following two consecutive quarters of contraction.

Most analysts agree the gloomy trend is set to continue in the coming months, with leading economic institutes now expecting the German economy to shrink by 0.2 to 0.4 per cent in 2023.

ZEW said inflation and interest rate hikes from the European Central Bank were hitting private spending hard, which was hurting industry.

Despite a steep fall in energy prices, the manufacturing sector – particularly the chemicals industry – is struggling to regain its strength from before the war in Ukraine.

A batch of negative economic data in recent weeks has dented hopes of a strong rebound in Europe’s industrial powerhouse.

Meanwhile unemployment showed a surprise rise in June to 5.7 per cent.

However, factory orders, which are closely watched as a foretaste of future industrial activity, rose significantly in May, according to official data.

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