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Investing.com -- The ZEW economic research institute announced on Tuesday that German investor morale has seen a stronger-than-expected rise in May, bouncing back from a significant drop in the previous month.
The economic sentiment index climbed to 25.2 points, a significant increase from April’s -14.0 points. Analysts had predicted a more modest rise, with an expected reading of 11.9.
The rise in investor morale is attributed to several factors. The establishment of a new government, progress in tariff disputes, and a stable inflation rate have all contributed to a surge in optimism, as stated by ZEW President Achim Wambach.
The increase in May offsets some of the losses experienced in April. This was when German investor morale experienced its most substantial fall since Russia’s invasion of Ukraine in 2022, a decline triggered by uncertainties surrounding U.S. tariffs.
The ZEW’s May survey indicates that sentiment has improved across nearly all industries. Particularly notable is the boost in morale within the banking sector and export-intensive sectors such as the automobile and chemical industries.
The European Central Bank’s most recent interest rate cut, along with the expectation of future rate cuts, has had a particularly positive impact on the construction industry, according to the ZEW.
The indicator for assessments of the current economic situation dropped slightly in May, falling to -82.0 points from -81.2 points in April. The score, which ranges from -100 to +100, is based on a survey of approximately 350 financial analysts based in Germany, working at banks, insurance companies, and large industrial firms.
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