German economic sentiment dips in January, comes in at 10.2

FXStreet (Mumbai) - The ZEW Centre for Economic Research reported that its index of German economic sentiment fell by 5.9 points to 10.2 in January, down from December's reading of 16.1. However, the fall was not as big as expected by markets, which highlight the optimism over the health of the German economy. Analysts had expected the index to fall by 7.9 points to 8.2 in January. The Current Conditions Index also improved, rising to 59.7 from 55.0 in December. It was also better than the expected reading of 54.0.

Sentiment dipped mainly due to fears of slowdown in China and other growth issues plaguing large developing economies. Clemens Fuest, president at the ZEW explained "Expectations among businesses with a large exposure to China, such as the investment goods industry and the steel industry, have been hit hard," said.

The index of euro zone economic sentiment however dropped to a 14-month low of 22.7 in January from December’s 33.9, falling below the estimated figure 27.9.

The ZEW survey portrays the result of assessment of financial analysts and institutional investors. Economic forecasters however tend to depend more on business surveys like the PMIs and the Ifo survey to gain an insight into the strength and weaknesses of an economy.