Data published by the Leibniz Centre for European Economic Research (ZEW) showed that the indicator of German economic sentiment rose sharply in March, reaching its highest level since February 2022. The assessments of the current economic situation have also improved, albeit only slightly.
According to the report, the indicator of economic sentiment rose to 51.6 points compared to 26.0 points in February. The index remains in positive territory for the 17th month in a row. Economists had expected the index to rise to 48.1 points. Meanwhile, the index of the current economic situation rose by 0.9 points to -87.6 points. Consensus estimates suggested an increase to -80.5 points.
“Rising optimism is probably due to positive signals regarding the future German fiscal policy. In particular, prospects for metal and steel manufacturers as well as the mechanical engineering sector have improved. In addition, the sixth consecutive interest rate cut by the ECB means favorable financing conditions for private households and companies,” said ZEW President Professor Achim Wambach.
The data also showed that the indicator of economic sentiment in the eurozone rose to 39.8 points (the highest value since July 2024) from 24.2 points in February. Economists had forecast growth to 39.6 points. The indicator of the current economic situation rose by 0.1 points to -45.2 points, and inflation expectations increased by 24.6 points to 6 points.