Germany Slows

From Bloomberg:
German Investor Confidence Falls

German investor confidence fell to a 21-month low in October as weaker global growth and a stronger euro dimmed the export outlook.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, dropped for a sixth month, to minus 7.2 from minus 4.3 in September. While the reading was the lowest since January 2009, ZEW’s gauge of the current situation jumped to 72.6, a three-year high.

Europe’s largest economy may cool after expanding at the fastest pace in two decades in the second quarter as foreign sales, the main driver of growth, lose momentum. At the same time, falling unemployment is boosting household confidence and spending, prompting the Bundesbank to predict yesterday that growth may exceed 3 percent this year. The benchmark DAX share index has gained 10 percent since Aug. 30 and extended its gain today after ZEW’s report.

The decline in the headline number “probably reflected some concerns about the global headwinds facing Germany,” said Andreas Scheuerle, an economist at Dekabank in Frankfurt. “However, it is absolutely no reflection on the underlying strength of the German economy. Domestic demand is finally picking up, so ZEW should stabilize in the coming months.”