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German investor sentiment deteriorates amid chip shortages

By Michele Maatouk

Date: Tuesday 07 Sep 2021

LONDON (ShareCast) - (Sharecast News) - German investor sentiment deteriorated more than expected in September amid a shortage of semiconductors and building materials, according to a survey released on Tuesday by the ZEW Center for European Economic Research in Mannheim.
The headline ZEW investor expectations index fell to 26.5 from 40.4 in August, missing consensus expectations for reading of 30.3.

The current situation index printed at 31.9 in September, up from 29.3 in August but below the consensus expectations of 34.0.

ZEW President Professor Achim Wambach said: "Expectations fell markedly once more in September 2021. Although financial market experts expect further improvements of the economic situation over the next six months, the expected magnitude and the dynamics of the improvements have decreased considerably.

"Global chip shortage in the automobile sector and shortage of building material in the construction sector have caused a significant reduction in profit expectations for these sectors. This may have had a negative effect on economic expectations."

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: "Today's ZEW adds to the evidence from yesterday's Sentix that activity peaked midway through Q3 - expectations are weakening while the improvement in current conditions seems to be slowing. The smaller than expected increase in the current conditions index and further fall in the expectations index, to a five-month low, suggests that most analysts think, as we do, that GDP growth has probably peaked.

"We expect both indicators to fall further over the coming months as demand cools and monetary support for the economy eases a touch - we suspect that the ECB will announce that it plans to slow assets purchases under the PEPP during Q4 later this week."