The ZEW index continued its recent upward trend in April, increasing for the fifth consecutive month. The ZEW index, which measures investors' confidence now stands at 23.4, from 21.3 in March. At the same time, the current assessment component also increased to 40.7, from 37.6.
The positive ZEW reading adds to recent encouraging signals from the German economy. Both the ZEW and the Ifo index have been on a non-stop upward trend since the end of last year. Higher oil prices, new market turmoil and a return of sovereign debt woes, it looks as if – at least in the eyes of financial analysts – nothing can stop the German economy. However, this renewed optimism is still not reflected in the hard economic data. Yes, the economy avoided falling off the cliff but, at the same time, the stabilisation since the beginning of the year turned out to be weak. In fact, the German economy is still flirting with recession.
Today’s ZEW index is good news but it should be taken with a pinch of salt