Fra ABN Amro:

Euro Macro: Economic sentiment in Germany continues to drop – The string of ongoing monthly declines in Germany’s ZEW economic sentiment, which started in February, continued in July. The indicator, which gauges the expectations of economists and analysts about the state of the German economy during the next six months, dropped by almost 9 points and (at -24.7), to reach its lowest level since the summer of 2012.

The details of the survey show that worries about Italy, which were the driver of the drop in sentiment in June, eased in July. However, the improvement in the expectations about Italy’s economy was overshadowed by rising worries about the escalation of the global trade conflict.

Indeed, the expectations about the economies of the eurozone, US, UK and Japan all dropped sharply in July. Moreover, at the sector level, sentiment about the mostly export-orientated automobile and chemical sectors dropped the most of all sectors. The ZEW expectations are largely driven by sentiment in financial markets and not by real economic developments.

This was illustrated by the fact that surveys such as the PMI and Ifo business climate, which include assessments of actual order positions and inventories of finished goods, have suggested that most of the weakness in manufacturing was in January-April and that the sector might regain some momentum after the summer. (Aline Schuiling)