German Economic Sentiment Unchanged

German economic sentiment was unchanged in December, missing forecasts for a slight increase and dampening optimism over the motor of the eurozone economy, industry data showed on Tuesday.

In a report, the ZEW Center for Economic Research said that its index of German economic sentiment was unchanged this month from November’s reading of 13.8. Analysts had expected the index to increase to 14.0 in December, Investing.com reported.

On the index, a level above 0.0 indicates optimism, a level below 0.0 indicates pessimism.

The Current Conditions Index however, smashed past consensus with a sharp rise to 63.5 this month from 58.8 in November, compared to expectations for a smaller increase to 59.1. That was its highest level since September 2015.

Additionally, the index of eurozone economic sentiment rose to 18.1 in December from 15.8 a month earlier. Consensus was looking for an increase to 16.5. Despite the unchanged reading in the German economic sentiment in November, the improvement in current conditions led ZEW president Achim Wambach to declare that the overall assessment is “quite positive”.

“The considerable economic risks arising from the tense situation in the Italian banking sector, as well as the political risks surrounding upcoming elections in Europe, seem to have faded into the background at the moment,” he concluded.

The German economy, one of the few bright spots in Europe, has a tough year in store. Economic growth will slow by nearly half to 0.9% in 2017, according to the Handelsblatt Research Institute.

Meanwhile, Germany’s engineering sector does not expect a big negative impact from US president-elect Donald Trump’s future trade policies and warned that protectionism would also hurt the US economy, trade body VDMA said.

“It’s hard to have a response to the possible policies of an elected president who hasn’t even said yet what he plans to do, aside from having made a lot of noise during the election campaign... But I don’t believe that the president’s policies will have a direct impact on German engineering firms,” Carl Martin Welcker told journalists at a news conference on Tuesday.

He said that many US machinery makers were dependent on their German suppliers because the components they needed were not available locally.

“America would not be doing itself a favor if it cut that off,” Welcker said.