What Is th꧙e ZEW Indicator of Economic Sentiment?

The ZEW Indicator of Economic Sentiment is a sentiment indicator created out of the monthly ZEW Financial Market Survey. This survey is an aggregation of the sentiments of approximately 350 澳洲幸运5官方开奖结果体彩网:economists and analysts on the economic future of Germany in the mediumꦺ term.

ZEW stands for Zentrum für Europäische Wirtschaftsforschung whic♔h translates to the Center for European Econ🧸omic Research.

Understanding the⛄ ZEW Indicator of Economic ꩲSentiment

The ZEW Financial Market Survey covers several ar🔜eas, sectors, and regions but only the questions related specifically to the German economy are used to create the ZEW Indicator of Economic Sentiment.

A simple indicator reading from this data is given showing the difference between the number of analysts who are bullish on the German economy versus those who are bearish.

The ZEW Indicator of Economic Sentiment 💟would have a positive value of 30 if 20% of respondents expect the German economic situation to deteriorate, 50% expect it to improve, and 30% expect it to remain unchanged. This is a bullish reading. It suggests that financial experts see positive signs for growth in the medium term.

Double-digit readings aren't uncommon because this is a sentiment indicator. The ZEW Indicator of Economic Sentiment went from a positive reading of 20.4 to -25 over seven months in 2018. German economic growth slowed from 2.2% in 2017 to 1.5% during this time but the impact on the ZEW Indicator of Economic Sentiment somewhat overstated the severity of this slowdown as sentiment indicators are known to do.

Sentiment Indicators

Economic sentiment indicators are a popular means of gauging and forecasting trends in the economy and the markets. Various economic theories support the use of suc🦋h indicators although they may otherwise disagree greatly in their assumptions and conclusions.

These include 澳洲幸运5官方开奖结果体彩网:Keynesian economics with its focus on investor and consumer psychology as fundamentally irrational driving forces of 澳洲幸运5官方开奖结果体彩网:recessions and 澳洲幸运5官方开奖结果体彩网:business cycles.

They include the 澳洲幸运5官方开奖结果体彩网:rational expectations theory with its assertion that market participants in general use all available and relevant economic input combined with a more or less accurate unders꧟tanding of the structure of the😼 economy to efficiently form rational expectations of future economic trends.

Types of Indicators

Sentiment indicators usually take the form of surveys of opinions or intentions toward future actions and economic trends among various groups of people in the economy. Sentiment indicators are geared to leveraging the 澳洲幸运5官方开奖结果体彩网:wisdom of crowds by surveying🗹 large numbers of people. In🐲dividuals might be mistaken but the average thinking of a large number of people aggregates more dispersed information and is likely to be more accurate.

The groups surveyed may include investors, CEOs, supply chain managers, small business owners, bank lending officers, or consumers. A survey of consumer sentiment might ask a sample of consumers whether the✨y feel optimistic about the economy and whether they plan to make any big-ticket purchases in the next six months.

Some indicators are targeted at key participants such as consumers and investors who directly drive markets. Some like the ZEW Index of Economic Sentiment ⛦are targeted at experts who are expected to have better-than-average insight into future economic trend🦩s.

🍬The Data Behind the ZE🍬W Indicator of Economic Sentiment

The ZEW Indicator of Economic Sentiment takes the aggregate of around 350 economists' and analysts' sentiments to get a sense of Germany's economic future. These experts come from banks, insurance companies, and the financial departments of selected corporations. They're asked about their expectations for the coming six months and their opinions regarding the general economy, 澳洲幸运5官方开奖结果体彩网:inflation rates, interest rates, stock markets, 澳洲幸运5官方开奖结果体彩网:exchange rates, and oil prices.

The Bottom Line

The ZEW Indicator is a sentimen🐼t indicator that measures expert opinions regarding the German economy. It’s based on a monthly survey of🐎 up to 350 experts including financial professionals and analysts. It’s used to gauge trends in the economy.

The ZEW Financial Market Survey covers the economic futures of several other countries and regions in addition to the questions about the German economy. They include Japan, the United States, the eurozone, the UK, France, and Italy.