Germany's ZEW investor confidence index falls 4.9 points in November from October
By: GEORGE FREY
Associated Press
11/10/09 6:50 AM EST
FRANKFURT — German investor confidence fell in November from the previous month, a leading survey showed Tuesday, reflecting doubts about the sustainability of economic recovery.
The ZEW survey, which tracks views of Europe's largest economy, dropped 4.9 points and now stands at 51.1.
Despite the decline, which follows a 1.7 point monthly dip in October, the index is still well above its historical average of 26.9 points.
The ZEW, based in Mannheim and also known as the Center for European Economic Research, said the assessment of the current economic situation in Germany improved by 6.6 points to minus 65.6 points in November.
Economic expectations for Germany are still high, although financial experts became slightly less confidence and were still uncertain over how the economy will progress.
The ZEW said there were concerns about the labor market and its impact on consumer spending.
On the other hand, the survey showed that the continued improvement in German exports is feeding optimism for recovery.
Earlier this week, official data showed German exports rose 3.8 percent on the month in September. Still, exports remained 18.8 percent below the levels of a year earlier, the Federal Statistical Office said.
"The upward trend of the economic expectations is interrupted for the time being," Wolfgang Franz, ZEW's president said in the report.
"The surveyed financial market experts signal that they do not count on a strong boost for economic growth in the next year. It rather seems that economic recovery will proceed in small steps," Franz said.
The indicator for the current economic situation in the 16 countries that share the euro currency improved by 5.1 points and now stands at minus 70.3 points, while the economic expectations for the euro zone decreased by 5.1 points to 51.8 points in November.
The German economy returned to modest growth in the second quarter following a deep recession.
"First, we think that the business expectations component has still some upward potential," Andreas Rees, UniCredit's chief German economist said in a research note. "Second, hard data will remain strong in the months ahead with momentum carrying over into the first quarter of 2010. This should especially be true for exports, whereas consumer expenditures will get substantially weaker due to a strong rise in unemployment."
In a separate report Tuesday, the Federal Statistical Office said German October consumer prices rose 1 percent from September while they remained unchanged compared with a year ago.
Energy prices led the decline, falling 7 percent overall from a year ago, with liquid fuel prices falling more than 25 percent.
Food prices fell 3.4 percent for the year, while consumer goods prices showed a 1 percent increase.
Tobacco product prices were more than 5 percent higher on the year and package holiday prices were up by more than 4 percent.
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