German investor morale falls in July – ZEW

German investor morale clouded over in July, the ZEW economic research institute said on Tuesday, reporting a drop in its economic sentiment index to -14.7 points from -8.5 points in June.

Analysts polled by Reuters had pointed to a July reading of -10.5.

The indicator is moving noticeably into negative territory as “financial market experts predict a further deterioration in the economic situation by year-end,” said ZEW president Achim Wambach.

An expected rise in short-term interest rates in the euro zone and the United States as well as weak export markets such as in China are key reasons for the negative outlook, he added.

Industrial sectors are likely to bear the brunt of the anticipated economic downturn, said Wambach.

The German economy fell into recession in early 2023 after household spending, a key source of growth for Europe’s economic engine, succumbed to pressures from high inflation.

German industry had a strong first quarter, benefiting from the easing of supply chain constraints and a backlog in orders, but incoming orders have recently declined, limiting companies to maintaining their activities rather than expanding them.