German analyst and investor sentiment fell for a sixth month running in March but the rate of decline eased, boosting prospects of a more durable upturn for Europe's largest economy after a weak first quarter.
The Mannheim-based ZEW economic think tank said today its monthly poll of economic sentiment came in at 44.5 in March, down from 45.1 in February. The consensus forecast in a Reuters poll of 43 economists last week was for a fall to 43.7.
Euro zone benchmark government bond futures hit a session low after the stronger-than-expected data.
"German business activity has moved from the intensive care unit to rehab. But it is still far from full recovery," ZEW President Wolfgang Franz said in a statement.
The ZEW said the indicator showed financial markets expect the economy to recover slowly within the next six months.
The index was based on a survey of 289 analysts and investors conducted between March 1st and March 15th. Although the ZEW reading fell, March's reading remained well above the indicator's historical average of 27.2 points.
Other recent economic data have suggested the German economy struggled to grow at the start of this year, with business confidence falling for the first time in almost a year in February.
German exports also posted their biggest drop in a year in January, throwing the economy's main growth engine into reverse at the start of 2010, but a surge in orders suggests the decline will be temporary.
"While the first quarter could still disappoint, the second quarter will make up for it," said Carsten Brzeski, economist at ING Financial Markets.
A separate gauge of current conditions registered -51.9 after -54.8 in February.
The German economy emerged from its deepest post-war recession in the second quarter of last year before stalling in the final three months of 2009.
However, a purchasing managers' survey released this month showed German manufacturing activity expanded in February at its fastest rate since June 2007, boosted by a rise in new orders.
"While scepticism about the global environment has grown, Germany still stands out in a positive way. In the first half, we see a good chance that the recovery in Germany will continue," said Postbank economist Heinrich Bayer.
Reuters