Macro Monday 38 ~ The EU & German ZEW Economic Sentiment Index

18 mar

Macro Monday 38

The Euro Area ZEW Economic Sentiment Index &
The German ZEW Economic Sentiment Index
(Released this Tuesday 19th Mar 2024)

ZEW is the German acronym for the Zentrum für Europäische Wirtschaftsforschung, which translates to the Centre for European Economic Research.

There are two releases from the Centre for European Economic research we will cover today both being released this coming Tuesday;

1. The Euro Area ZEW Economic Sentiment Index
(Reading of 25 for Feb 2024)

2. The German ZEW Economic Sentiment Index
(Reading of 19.9 for Feb 2024)

EURO AREA ZEW INDEX
This index is derived from 350 economists and analysts that operate from and represent the overall European Area. They include economists and analysts from different countries in the Eurozone that are using the Euro as their currency (20 countries out of the 27 members). In summary, while the EU ZEW index provides a broader perspective for the entire eurozone than the German ZEW Index discussed below, the exact methodology for distributing the surveys and their apportionment across individual countries within the eurozone is not explicitly disclosed. Historically, this index has proven very useful as a leading indicator of sentiment for the European Economy and it is closely monitoring for gauging economic sentiment in the EU by market participants.

EURO AREA ZEW CHART - SUBJECT CHART ABOVE

How to read the chart
The index ranges from -100 (pessimism) to +100 (optimism). 0 is neutral however the historical average reading for the EU chart is 21.39 which is the point where the red area meets the green area on the chart. We show on the chart if we are above or below the average levels of optimism.

The current reading of 25 indicates current optimism among analysts for the next 6 month

The Trend
Sentiment made a recovery from -60 in Sept 2022 to +25 in Feb 2024. We have moved from deep in negative sentiment territory to just above the historical average of the chart which is 21.39.

GERMAN ZEW INDEX
The German ZEW Index data is not derived from all the countries in Europe, it is derived from the views of collection of 350 economists and analysts that operate from and represent the German economy. As Germany is the largest economy within the Euro Area, its performance significantly impacts the overall region and this this metric could be considered the economic sentiment spearhead of Europe. Germany is also the 4th largest economy in the world by nominal GDP. As of 2023, its nominal GDP stands at approximately $4.43 trillion. This index could be monitored as a measure of not only European sentiment but as an important global sentiment gauge.

GERMAN ZEW INDEX CHART


How to read the chart
The index ranges from -100 (pessimism) to +100 (optimism). 0 is neutral however the historical average reading for the German ZEW chart is 20.79 which is the point where the red area meets the green area on the chart. We show on the chart if we are above or below the average levels of optimism.

The current reading of 19.9 indicates current optimism among analysts for the next 6 months, however we are below the historical average of 20.79 thus a definitive move above this level this coming Tuesday could be a confirmation step into potential sustained optimism.

The Trend
Sentiment made a recovery from -61 in Sept 2022 to +19.9 in Feb 2024. We have moved from deep in negative sentiment territory into positive numbers but we are not above the historic average of 20.79 yet.

Lets see how both perform this coming Tuesday. The beauty of these charts is that you can review both on my Trading View at any stage, press play and it will update with the most recent release. This way you will have a full explainer of what this dataset is and can keep yourself up to date on its direction with the color coded map, the average line and the neutral line, all of which will at a glance give you a good indication of where we stand in terms of trend and sentiment. I'll keep you informed here too

Thanks for coming along

PUKA

19 mar

Uwaga

Europe Area ZEW Economic Sentiment Index
Rep: 33.5 ✅ Higher Than Expected ✅
Exp: 28
Prev: 25

Economic sentiment for the 20 European countries that use the Euro (Euro Area or Eurozone) exceeded expectations today rising from 25 in Feb to 33.5 in Mar 2024.

Now above its historic average of 21.39 and breaking above the most recent high of 29.7 from Feb 2023, economic sentiment shifts to the positive for the Eurozone.

It is worth noting that the ZEW sentiment index reflects analysts’ expectations for the economic development over the next 6 months and is a forward looking indicator based off soft data surveys



How to read the chart
The index ranges from -100 (pessimism) to +100 (optimism). 0 is neutral however the historical average reading for the Euro Area ZEW chart is 21.39 which is the point where the red area meets the green area on the chart. We show on the chart if we are above or below the average levels of optimism.

This soft data is compiled from surveys collected from 350 economists and analysts that operate from and represent the Euro Area which consists of 20 of the 28 countries in the European Union.

The calculation of the ZEW Economic Sentiment Index involves the difference between the percentage of analysts who are optimistic and the percentage of analysts who are pessimistic about economic development.

PUKA

16 kwi

Uwaga

Euro Area ZEW Economic Sentiment Index (APR)
Rep: 43.9 ✅Higher than Expected ✅
Exp: 37.2
Prev: 33.5

This indicator is a forward looking Economists outlook for the 20 Euro Zone Countries.

The data released today shows a strong increase in optimism from 33.5 in March to 43.9 in April 2024. The EU ZEW Index is reaching levels not seen since Feb 2022 which were at 48.6 (slightly higher).

✅The index is well above its neutral level of 0 and well above its historical average of 21.39

The 350 Economists that complete these surveys are suggesting that the 6 month forward outlook for the Euro Area is quite optimistic.

The above chart should be considered in combination with others for Europe such as the following (includes reference to above chart):

1. Macro Monday 38✅Positive 6 month forward
The EU & German ZEW Economic Sentiment Index
Economists Outlook

2. Macro Monday 39 🔴Remains Contractionary
Euro Area Economic Sentiment Indicator (ESI).
Business and Consumer outlook.

3. Macro Monday 40 ✅Marginally Expansionary
Euro Area Composite PMI

You will find these all on my TradingView and you can press play on the chart to get a long term look and easy visual on if we are in the optimistic or pessimistic territory

Thanks