The German Recovery Is Petering Out

Germany's investors are getting more and more bearish about the country's economic situation, and Europe as a whole.

The ZEW index of investor confidence in the Eurozone dropped to 14.2 this morning, and the German reading slumped to 6.9. Both are the lowest since 2012, as growth and inflation in the region drop to almost nothing.

The ZEW survey asks investors questions about how strong they think the Eurozone and German economies are now, and how strong they expect them to be in several months' time, gauging their confidence. A good ZEW number is as high as possible - but both these scores are barely above zero.

Pantheon Macro

Jennifer McKeown of Capital Economics said the survey adds to the pile of evidence "that the German recovery is petering out," according to a note to investors.

"The fact that the index is barely positive means that only a small majority of investors see German economic conditions improving in the next six months."

The country saw a surprise GDP contraction in the second quarter, with a drop of 0.2%, and the threat of further sanctions on or from Russia is another major factor adding to the grim outlook for Germany and Europe.