Investor confidence in German economic outlook sinks in June

Bloomberg

Investor confidence in Germany’s economic outlook worsened dramatically in June after the Bundesbank predicted the economy will shrink this quarter.
An index measuring prospects for the next six months fell to -21.1 in June, a far worse reading than economists expected. The decline indicates increased pessim-ism after solid first-quarter growth, and comes as the ECB debates if it needs to ease policy further. The German economy, Europe’s largest, has turned into a weak spot in region with projected gr-owth of just 0.6 percent this year. Manufacturing is shrinking, business sentiment plunged to the weakest in more than four years and persistent trade tensions are weighing heavily on momentum.
There is “increased uncertainty regarding the future development of the global economy,” said ZEW President Achim Wambach. “The intensification of the conflict between the USA and China, the increased risk of a military conflict in the Middle East and the higher probability of a no-deal Brexit are all casting a shade on the global economic outlook.”
Activity in three months through June is likely to decline, according to the country’s central bank, after first-quarter output was bolstered by stockpiling ahead of Britain’s planned departure from the European Union, strong construction and a rebound in the car industry from weakness at the end of 2018. The Bundesbank expressed confidence that domestic demand continues to be robust for now. Meanwhile, a jump in German deliveries helped European car registrations to post the first increase in nine months in May.
Sales climbed 0.04 percent to 1.44 million cars compared to a year ago, the European Automobile Manufacturers’ Association said on Tuesday. Sales in Germany, the biggest European auto market, surged 9.1 percent to counteract an ongoing pullback in the UK, where uncertainty over Brexit continues to put off consumers from purchasing new
vehicles. Spain also declined.