ZEW Survey Sees Some Stability and Improvement Across Global Economies

The latest ZEW survey from German financial experts has shown some stability and improvement in economic situations. The euro area improved to -21.5 in August from -37.7 in July, while the German economy advanced to -61.1 from -77.6. However, the U.S. worsened to a reading of 12.9 in August from 14.9 in July.

China's assessment was nearly unchanged at -25.1 in August compared to -25.2 in July. The Chinese economy took the top position with a 73.8 percentile standing, followed by the euro area with a 56.6 percentile standing and the U.S. with a 41.7 percentile standing.

Macroeconomic expectations also showed improvement across all three countries - Germany, the U.S., and China. The largest improvement came from Germany, while the smallest came in China. In terms of macroeconomic expectations, Germany's economy had a 58.8 percentile standing, followed by the U.S. with a 48.2 percentile standing.

There was also a drop-off in inflation concerns across all countries. The euro area's expectations fell to 2.4 in August from 10.4 in July, while Germany's expectation dropped to a net diffusion reading of 1.8 from 14.9 in July. China saw a sizeable drop off as well, with its expectations falling to 5.3 in August compared to 12.9 in July.

The experts behind the ZEW survey remained undeterred in their inflation outlooks despite these changes. Short-term interest rate expectations did not change in the euro area, but there was some backing off in the U.S. and a substantial downshifting in China. Long-term rate expectations also showed moderation across all countries.

One interesting feature of the survey was the positive outlook on stocks in August, with all four responding areas logging diffusion values close to 40. The current reading for China had a 92.3 percentile standing, while the U.S. and euro area had standings of 74.4 and 59.3 respectively.