ZEW Economic Sentiment in Germany

The ZEW Economic Sentiment Indicator captures the six-month expectations of around 300 analysts and financial market professionals for the German economy. It is compiled by the ZEW institute in Mannheim, and the release also includes an assessment of the current situation.

It is calculated as the balance between the share of optimists and pessimists in the ZEW Financial Market Survey, a monthly poll conducted in the two weeks before release. It is expressed in points and can be positive or negative.

It is the first major German sentiment gauge each month, released ahead of the ifo index and the final PMIs, and it reacts quickly to market swings. Given its leading nature, a sustained improvement points to recovery ahead and tends to support the euro.

It surveys analysts rather than companies, so it gauges market sentiment more than real activity and tends to be volatile. Its sharp swings may not feed through to the economy and are best cross-checked against surveys such as the ifo.